<PAGE>

                                     FORM 10-K/A

                         SECURITIES AND EXCHANGE COMMISSION
                              Washington, D.C.  20549

[X]                 ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)

               For the fiscal year ended                 June 30, 1996
                                                 ----------------------------
                                        OR
[ ]          TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                          SECURITIES EXCHANGE ACT OF 1934

For the transition period                   to                      
                         ------------------     -------------------

                      Commission file number           0-7903
                                             --------------------------
                                Quixote Corporation
                    -------------------------------------------
               (Exact name of registrant as specified in its charter)

       DELAWARE                                     36-2675371
---------------------------                    -------------------
(State or other jurisdiction of                 (I.R.S. Employer
incorporation or organization)                 Identification No.)

ONE EAST WACKER DRIVE, CHICAGO, ILLINOIS              60601
------------------------------------------       ---------------
(Address of principal executive offices)            (Zip Code)

Registrant's telephone number including area code:     (312) 467-6755
                                                     ------------------

Securities Registered Pursuant to Section 12(g) of the Act:

                        Common Stock     ($.01-2/3 Par Value)
                   -----------------------------------------------
                                   (Title of Class)

Indicate by check mark whether the registrant  (1) has filed all reports 
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 
1934 during the preceding 12 months (or for such shorter period that the 
registrant was required to file such reports), and  (2) has been subject to 
such filing requirements for the past 90 days.   Yes    X            No     
                                                     --------           ------

Indicate by check mark if disclosure of delinquent filers pursuant to Item 
405 of Regulation S-K is not contained herein, and will not be contained, to 
the best of registrant's knowledge, in definitive proxy or information 
statements incorporated by reference in Part III of this Form 10-K or any 
amendment to this Form 10-K (X).

State the aggregate market value of the voting stock held by non-affiliates 
of the registrant.  The aggregate market value shall be computed by reference 
to the price at which the stock was sold, or the average bid and asked prices 
of such stock, as of a specified date within 60 days prior to the date of 
filing.

                            $56,808,818 as of August 31, 1996
                     ------------------------------------------------



                                    - 1 -
<PAGE>

Indicate the number of shares outstanding of each of the registrant's classes 
of common stock, as of the latest practicable date.

 As of August 31, 1996 there were 7,961,680 shares of common stock outstanding.
 ------------------------------------------------------------------------------

                            DOCUMENTS INCORPORATED BY REFERENCE


The definitive proxy statement relating to the Registrant's Annual Meeting of 
Stockholders, to be held November 14, 1996, is incorporated by reference in 
Part III to the extent described therein.

                                     - 2 -


<PAGE>

                                    TABLE OF CONTENTS

<TABLE>
<CAPTION>
PART I                                                                   PAGE
                                                                        -------
<S>                                                                     <C>  
  Item  1.  Business...................................................   4-10

  Item  2.  Properties.................................................     11

  Item  3.  Legal Proceedings..........................................  12-16

  Item  4.  Submission of Matters to a Vote of Security Holders........     16

PART II

  Item  5.  Market for the Registrant's Common Equity and Related 
              Stockholder Matters......................................     17

  Item  6.  Selected Financial Data....................................     18

  Item  7.  Management's Discussion and Analysis of Financial
              Condition and Results of Operations......................  18-21

  Item  8.  Financial Statements and Supplementary Data................  21-36

  Item  9.  Changes in and Disagreements with Accountants on
              Accounting and Financial Disclosure......................     36

PART III

  Item 10.  Directors and Executive Officers of the Registrant.........     37

  Item 11.  Executive Compensation.....................................     37

  Item 12.  Security Ownership of Certain Beneficial Owners
              and Management...........................................     38

  Item 13.  Certain Relationships and Related Transactions.............     38

PART IV

  Item 14.  Exhibits, Financial Statement Schedule and Reports
              on Form 8-K..............................................  39-42

SIGNATURES.............................................................     43
</TABLE>
                                       - 3 -

<PAGE>

                                        PART I

                                      THE COMPANY

Quixote Corporation was originally incorporated under the laws of the State 
of Delaware in 1969 as Energy Absorption Systems, Inc.  In June, 1980, Energy 
Absorption Systems, Inc. changed its name to Quixote Corporation.  Unless 
otherwise indicated herein, the terms "Quixote" and the "Company" refer to 
Quixote Corporation and its subsidiaries.

Item 1.  Business
-----------------

Quixote Corporation and its subsidiaries operate as a diversified technology 
company which develops, manufactures and markets specialized products through 
two industry segments.  One segment is involved in the development, 
manufacturing and marketing of energy-absorbing highway crash cushions and 
related highway safety products for the protection of motorists and highway 
workers in markets which include both domestic and international governmental 
units.  The Company's other segment manufactures music compact discs and 
CD-ROM discs for the domestic entertainment, data storage, multimedia and 
education markets.

As of June 30, 1996, Quixote Corporation and its subsidiaries employed 978 
people.


                                  - 4 -

<PAGE>
HIGHWAY SAFETY DEVICES
----------------------



Description of Business
-----------------------

The patented highway crash cushions manufactured by Energy Absorption 
Systems, Inc. (Energy) were first conceived and developed in 1969 in response 
to the high number of fatalities and serious injuries suffered by occupants 
of errant vehicles in collisions with roadside hazards, such as bridge 
abutments, overpass piers, overhead sign supports, lane dividers, traffic 
islands and toll booths. Since that time, various types of Energy's highway 
crash cushions have been installed in front of thousands of life-threatening 
roadside hazards.  The Federal Highway Administration (FHWA) endorses the 
installation of highway crash cushions as an effective safety program.  Crash 
cushions have saved over 21,000 lives since 1969.

Energy develops, manufactures and markets a line of patented highway crash 
cushion systems and other barriers which absorb and dissipate the force of 
impact in collisions between vehicles and fixed roadside objects.  The 
product lines utilize the principles of momentum transfer and kinetic energy 
to safely decelerate errant vehicles.  Energy absorption or energy 
dissipation is accomplished by using different combinations of water, 
aluminum and steel shapes, urethane foam systems, cardboard, plastic 
structures, elastometric cylinders and sand.

The product lines can be generally divided into systems for construction 
zones and permanent mounts.  Product lines used primarily in construction and 
work zones are:  the truck mounted attenuator (TMA), the G-R-E-A-T (R) CZ 
system and the Triton Barrier (R).  Product lines used for permanent 
applications are:  the G-R-E-A-T (R) system, the Sandwich systems, the Low 
Maintenance Attenuator (LMA), the BrakeMaster (R) system, the TREND (R) 
system, the Sentre (R) system, the CushionWall (TM), the NEAT (TM) system and 
the BarrierGate (R).  The Energite (R) crash cushion system has been used in 
both construction zone and permanent applications.

The performance characteristics of the product lines are formally submitted 
to the US Federal Highway Administration to be approved as being eligible for 
federal aid highway projects.  All systems are approved as acceptable highway 
hardware according to procedures in the National Cooperative Highway Research 
Project number 230 or 350.

Energy does provide product education, selection and application assistance. 
Energy generally does not perform site preparation or installation for any of 
its products.  Installation services must be obtained from others.

Spin-Cast Plastics, Inc., a wholly-owned subsidiary of Energy Absorption, 
manufactures rotational molded plastic products including the Energite (R) 
system, plastic components used in Energy's other product lines, as well as 
custom designed plastic components for industrial products.

Safe-Hit Corporation, another wholly-owned subsidiary of Energy Absorption, 
manufactures and markets a line of flexible sign and guide post systems and a 
glare screen system.  The guide posts are extruded from polypropylene, are 
used to delineate a travel way, channelize vehicles or mark the location of 
an object.  The post features an in-ground anchor system that permits 
inexpensive repair and replacement techniques.  The glare screen system, also 
made from polypropylene, is installed on top of median barriers to eliminate 
the distraction of lights from an oncoming vehicle on roads where the inside 
lanes are adjacent to the median barrier.  Both products are covered by 
patents.

In 1989, Energy acquired the world-wide patents and licensing agreements 
covering the movable traffic barrier system of Quick-Steel Engineering PTY. 
Ltd. of Botany, Australia.  Energy received an 8% royalty on the sales of 
such products by its licensees.  Energy sold the patents and licenses to the 
US licensee in March 1996.

                                    - 5 -

<PAGE>

In July 1992, Energy purchased the stock of Composite Components, Inc.  CCI 
was a development-stage company organized to develop an Electro-Cured (TM) 
system for the repair and rehabilitation of underground sewer pipes.  CCI 
perfected the process and made several successful installations, but elected 
not to commercialize the process and ceased operations in 1996.

Competition and Marketing 
-------------------------

Energy's products are sold in all 50 U.S. states.  Six regional managers 
supervise Energy's 24 domestic distributors and make direct sales in areas 
not covered by distributors.  Although the Federal government provides 
matching funds for the purchase of highway safety products made by state and 
local governmental agencies, it is not a direct purchaser of Energy's 
products. Energy sells its products principally to either distributors or to 
contractors (on behalf of state and local governments) with less than 5% sold 
directly to state and local government agencies.  Safe-Hit's products are 
sold by their own regional managers who supervise a large number of 
distributors and make sales calls on certain state departments of 
transportation and contracting firms.  A number of other companies 
manufacture flexible guide posts.

Many international governments are now beginning to recognize the need for 
crash cushions as a method of reducing traffic fatalities.  Energy's products 
have been sold in 36 foreign countries.  Energy's two international 
consultants and 38 foreign agents make sales to municipal and national 
governments and contractors who are responding to bids from the respective 
governments.

Although Energy does experience competition in specific product lines, 
particularly in the Energite, G-R-E-A-T and TMA lines, no other company 
presently markets as broad a line of highway crash cushion systems designed 
to shield as large a variety of fixed roadside hazards.

Government Policies
-------------------

The market for crash cushions is directly affected by federal, state and 
local governmental policies.  A substantial portion of Energy's sales is 
ultimately financed by funds provided to the states by the federal 
government. Historically, these funds have covered 75% to 90% of the cost of 
highway safety projects on roads constructed or maintained with federal 
assistance.  Energy's sales could be adversely affected by a reduction in 
federal assistance for highway safety projects.  The Intermodal Surface 
Transportation Efficiency Act of 1991, signed into law on December 18, 1991, 
provides authorization for highways and highway safety. Total funding of 
approximately $150 billion could be available over a six year period, but 
there is no assurance that the total $150 billion will be available or will 
be expended during the six year time period.  The funds are distributed to 
the states each year.  The states must set aside 10 percent for safety 
construction activities such as hazard elimination. In order for highway 
devices to be eligible for federal funding, such devices must be approved by 
the Federal Highway Administration.  Energy is obligated to seek such 
approval for improvements or upgrades to such devices and for any new devices.

Energy develops new products by working with federal and state highway 
officials to determine highway traffic safety needs, and then designs 
products to satisfy those needs.  Energy is also active in promoting 
cooperation among state highway agencies, contractors and engineers to 
encourage comprehensive repair and maintenance of roadside crash attenuating 
systems.  In addition to developing new products within the impact technology 
area, Energy is seeking to develop or to acquire new products which can be 
sold through its existing distribution networks to its existing customers.

                                   - 6 -

<PAGE>

Backlog
-------

As of June 30, 1996, 1995 and 1994, Energy had a backlog of unfilled orders 
for highway safety devices of $8,591,000, $10,200,000 and $8,057,000, 
respectively. The Company can usually fill an order within 6 to 8 weeks of 
receipt.

Research and Development; Patents
---------------------------------

Energy conducts its own research, development and testing of new products 
before introducing them to the marketplace.  The expenditures for research 
and development activities were $1,536,000, $1,545,000 and $1,972,000 in the 
years 1996, 1995 and 1994, respectively.

Energy owns a number of U.S. and foreign patents covering its major highway 
safety products.  It actively seeks patent and trademark protection for new 
developments.

Raw Materials
-------------

The principal raw materials used in the production of highway safety devices 
are plastic and plastic resins, steel, aluminum and wood components.  These 
raw materials are purchased from various suppliers and have been readily 
available throughout the last year.  Energy believes that adequate supplies 
of these materials will continue to be available.

Major Customers
---------------

No single customer represents a significant portion of Energy's highway 
safety business.

Other
-----

In April 1995 Energy acquired a 40% interest in Quantic Industries, Inc. for 
$6,700,000.  Quantic is a manufacturer of electronic and pyrotechnic devices 
for the aerospace and defense industries and has also developed a low-cost 
proprietary initiator for automobile airbag systems.  Energy sold its 40% 
interest in May 1996 for $8,050,000.

                                    - 7 -

<PAGE>

COMPACT DISC MANUFACTURING 
--------------------------



Description of Business
-----------------------

In 1975, the Company established a venture in Anaheim, California to conduct 
research on optical disc technology.  In 1983, the venture, which was named 
LaserVideo, Inc., was one of the first to manufacture an audio CD in the 
United States.  LaserVideo opened its second, significantly larger, CD 
manufacturing facility in Huntsville, Alabama in 1986.  In December, 1987 
Quixote sold LaserVideo to LaserVideo Acquisition Corporation (LVAC), a 
wholly owned subsidiary of Disctronics Australia Limited for $55,500,000, 
consisting of $29,000,000 in cash and $26,500,000 in a note.  As a result of 
LVAC's failure to pay the note when due and after various legal actions and 
agreements between the parties, LaserVideo was reacquired on May 1, 1990 and 
renamed Disc Manufacturing, Inc. (DMI).  The Company is involved in 
litigation related to this reacquisition of DMI which is discussed in Item 3 
Legal Proceedings in this Form 10-K.

DMI's principal activity is the manufacturing of optical discs.  The optical 
disc is a medium for storing audio, video, text or graphics information and 
includes compact music discs (CD-Audio) and CD-ROM, as well as other types of 
optical discs.  DMI converts information, generally either music or data, 
supplied by its customers, to optical disc format and then manufactures these 
optical discs for its customers.  In most cases, DMI will also package these 
discs such that they would be ready for retail distribution.  The advantage 
of optical discs is that they provide superior sound quality to that of 
competing audio media and can store vast amounts of information.  One CD-ROM 
can contain up to 650 megabytes of data, or the equivalent of 250,000 pages 
of text.

During 1994, DMI began a three year expansion plan that increased its annual 
capacity to approximately 200 million discs.  In August 1994, DMI acquired a 
218,000 square foot building in Anaheim, California to replace its smaller 
existing facility located nearby.  The total cost of the expansion including 
the purchase of the new Anaheim building and equipment for both facilities 
was approximately $50 million.  During May 1995, DMI began producing CD's at 
the new Anaheim facility.

Approximately 56% of DMI's revenues during 1996 were from the manufacturing 
of CD-ROM's, 35% of revenues from CD manufacturing and the remainder from 
services such as special mastering and other contract research and 
development type activities.

DMI is one of the ten largest compact disc manufacturers in the United 
States. DMI's plant in Huntsville, Alabama has a current annualized capacity 
of approximately 150 million discs.

DMI's Anaheim facility has an annual production capacity of 50 million discs. 
While the plant continues to produce CD's to meet west coast-based CD-ROM and 
music companies' requirements, the facility also is used for contract 
research and development of non-audio optical storage products. 

                                     - 8 -

<PAGE>

Competition and Marketing 
-------------------------

CD-Audio
--------

Six large multi-national music companies, known as the "majors", have 
historically accounted for nearly 80 percent of the industry's U.S. music 
sales. Each of these companies is vertically integrated to varying degrees.  
The majors are as follows:

*WEA (Warner Elektra Atlantic, part of Time Warner);
*Sony Music (previously CBS Records);
*MCA (a subsidiary of Seagrams);
*Capitol/EMI (a subsidiary of Thorn/EMI of the United Kingdom);
*PolyGram (partially owned by NV Philips of Holland) and
*BMG/RCA (part of the Bertelsmann Group of West Germany).

Each of the majors has manufacturing facilities to produce discs for their 
own needs, and in some cases, actively market for outside disc business as 
well. Some of the majors use outside sources, as a complement to their own 
facilities, to manufacture their music.  While the majors account for about 
80 percent of the U.S. music market, the remainder of the market is comprised 
of a large group of small independent record companies.  These independents 
typically do not have their own manufacturing facilities.  DMI markets CD's 
through a direct sales force to the majors and to independent record labels.

Presently there are more than sixty CD manufacturers in the United States.  
The Company believes DMI is one of the ten largest manufacturers and one of 
the five largest independent manufacturers in the United States.  Although 
production capacity exceeds the anticipated calendar year 1996 shipments of 
CD's, this excess capacity is utilized to meet the seasonal demands and short 
turnaround times in the CD industry.  DMI competes for CD business on price 
and service. As CD capacities have increased, selling prices for CD's have 
declined.  This has adversely affected profit margins at DMI.  The Company 
expects selling prices to continue to decline within the foreseeable future.

CD-ROM
------

The market for CD-ROM's is much more widely dispersed than music CD's and 
includes publishers, consumer and commercial software distributors and other 
companies that need a cost effective way to disseminate large amounts of data 
with easy search and retrieval capabilities.  There are more than 60 
manufacturers of CD-ROM's in the United States.  These manufacturers include 
many of those that make music CD's and in addition include companies that 
manufacture CD-ROM's exclusively.  DMI sells CD-ROM's through a direct sales 
force and value-added resellers.  DMI competes on the basis of quality, price 
and customer service.  Selling prices are declining due to competitive 
pressures.  The Company expects a continued decline in selling prices which 
will adversely affect profit margins at DMI.

Backlog
-------

As of June 30, 1996, 1995 and 1994 DMI had a backlog of unfilled orders 
totaling $2,220,000, $3,552,000 and $2,033,000, respectively.  Typically, 
music and CD-ROM companies demand manufacturing turnaround times (the time 
from which a sales order is received until that order is shipped) of ten days 
or less.  Because of this, DMI believes the size of the backlog is not an 
effective indicator of its operating status.


                                     - 9 -
<PAGE>

RESEARCH AND DEVELOPMENT; PATENTS
---------------------------------

DMI is actively involved in developing mastering equipment and replication 
processes for the new Digital Versatile Disc (DVD) format.  This two-sided, 
dual layer product may ultimately hold up to 17 gigabytes of information.  It 
is expected to be particularly well suited for carrying movies or current 
multi-disc CD-ROM applications.  The industry launch of this product is 
anticipated in the spring of 1997.

DMI has entered into licensing arrangements with certain companies holding 
patents with respect to optical disc technology.  These arrangements require 
DMI to pay royalties on each disc produced.  Other companies have sued DMI 
for infringement related to their patents on optical disc technology.  This 
litigation is discussed more fully in Item 3 Legal Proceedings in this Form 
10-K.

RAW MATERIALS
-------------

The principal raw materials in the manufacturing of compact discs are 
polycarbonate, aluminum, UV curable protective coating and ink.  All items 
are available from multiple sources and competitively priced.  DMI believes 
that adequate supplies of all materials will continue to be available in the 
long term.

MAJOR CUSTOMERS
---------------

DMI has manufactured CD's for all six of the major U.S. music companies.  BMG 
Music, which includes the RCA label, has historically been the largest single 
customer of DMI, and accounts for 8%, 18% and 21% of Quixote Corporation's 
annual consolidated revenue during the years ended June 30, 1996, 1995 and 
1994, respectively.  No other customer accounts for 10% or more of total 
Company revenues.

During 1996, DMI lost BMG Music as its major customer.  In September 1996, a 
new agreement was reached with BMG Music for an unspecified volume which the 
Company believes will be less than historical levels.

LEGAL TECHNOLOGIES
------------------

During 1996, the Company discontinued the operations of its legal 
technologies businesses, which had been involved in the development, 
manufacture and sale of products and systems for the legal community.  Under 
multiple arrangements the Company sold certain assets of this segment for an 
aggregate sales price of $5,981,000 and the assumption of certain 
liabilities.  Assets and liabilities retained by the Company at June 30, 1996 
include accounts receivable, accounts payable, certain repetitive stress 
injury litigation and liabilities under certain lease obligations.


                                     - 10 -

<PAGE>

Item 2. PROPERTIES
------------------
<TABLE>
<CAPTION>
                                                                          OWNED OR
LOCATION                     AVAILABLE SPACE   PURPOSE                    LEASED
--------                     ---------------   -------                    --------
<S>                          <C>               <C>                        <C>

One East Wacker Drive        19,000 sq. ft.    Executive Offices          Leased
Chicago, Illinois

250 Bamberg Drive           160,000 sq. ft.    Manufacture of highway     Owned
Pell City, Alabama                             safety devices

3617 Cincinnati Avenue       22,000 sq. ft.    Warehouse and research     Owned
Rocklin, California                            and development facility
                                               for highway safety
                                               devices

3300 N. Kenmore Street       81,000 sq. ft.    Sale and manufacture of    Owned
South Bend, Indiana                            highway safety devices

739 College Drive            28,000 sq. ft.    Storage facility for       Owned
South Bend, Indiana                            highway safety devices

1930 West Winton Avenue      20,000 sq. ft.    Manufacture of highway     Leased
Hayward, California                            safety devices

4905 Moores Mill Road       332,000 sq. ft.    Manufacture of compact     Owned
Huntsville, Alabama                            discs and CD-ROM's

3400 E. LaPalma Avenue      218,000 sq. ft.    Manufacture of compact     Owned
Anaheim, California                            discs and CD-ROM's

1409 Foulk Road               3,000 sq. ft.    Sale of CD-ROM's           Leased
Wilmington, Delaware

1025 North Brand Boulevard    1,500 sq. ft.    Sale of Compact Discs      Leased
Glendale, California

441 Lexington Avenue          1,000 sq. ft.    Sale of compact discs      Leased
New York, New York

1120 Cosby Way               31,000 sq. ft.    Vacant - to be sold        Owned
Anaheim, California

200 Corporate Pointe         19,800 sq. ft.    Vacant - to be sublet      Leased
Culver City, California

111 Bagby Street              8,100 sq. ft.    Vacant - to be sublet      Leased
Houston, Texas

225 West Washington           5,300 sq. ft.    Sublet                     Leased
Chicago, Illinois 

3000 Executive Parkway        5,000 sq. ft.    Sublet                     Leased
San Ramon, California

431 Lakeview Court            4,300 sq. ft.    Vacant - to be sublet      Leased
Mt. Prospect, IL

</TABLE>

Note:  Present facilities are believed to be adequate to support the Company's
       current and anticipated requirements.

                                     - 11 -  


<PAGE>


Item 3.  LEGAL PROCEEDINGS
--------------------------

A.  DMI - REACQUISITION RELATED LITIGATION.  On January 17, 1989, in a case   
    entitled QUIXOTE CORPORATION v. LASERVIDEO ACQUISITION CORPORATION a/k/a LV 
    ACQUISITION CORP., DISCTRONICS AUSTRALIA LIMITED, AND QUATRO LIMITED, No. 
    89 CH 370, the Company filed suit in the Circuit Court of Cook County,
    Illinois, County Department, Chancery Division after LaserVideo Acquisition
    Corp. ("LVAC") defaulted on a $26.5 million note guaranteed by Quatro
    Limited ("Quatro") and Disctronics Australia Limited.  The note was part of
    the payment due to Quixote in connection with the sale of its former
    LaserVideo, Inc. (now known as "Disc Manufacturing, Inc." or "DMI")
    subsidiary to the "Disctronics Group" (including Disctronics Limited,
    Disctronics Australia Limited, Quatro, LVAC, and their affiliates).
    
    On March 7, 1989, the Court entered a judgment in favor of the Company
    against LVAC, Disctronics and Quatro in the amount of $26,500,000,
    following the failure by the Disctronics Group to pay the amount due under
    a February 3, 1989 agreed settlement order.  The judgment additionally
    entitled the Company to post-judgment interest of 10.5% per annum
    compounded quarterly until the judgment was satisfied.
    
    On March 17, 1989, the parties entered into an agreement pursuant to which,
    among other things, the parties entered into agreed orders staying the
    proceedings in the Illinois litigation and in a companion case filed in the
    Court of Chancery of the State of Delaware, New Castle County, on March 8,
    1989 and entitled Civil Action No. 10668, QUIXOTE CORPORATION v. LASERVIDEO
    ACQUISITION CORPORATION, DISCTRONICS MANUFACTURING, INC., DISCTRONICS
    LIMITED, DISCTRONICS AUSTRALIA LIMITED AND QUATRO LIMITED.
    
    The Cook County and Delaware lawsuits were finally settled in December,
    1989, when the parties entered into a comprehensive Work-Out Agreement
    pursuant to which Quixote became a DMI shareholder.  On April 30, 1990,
    through the mechanisms established in the Work-Out Agreement, and as a
    result of the failure of the Disctronics Group to exercise an option to
    purchase Quixote's rights under the Work-Out Agreement, Quixote again
    became the sole shareholder of DMI.
    
    Since then, the following lawsuits have been filed and remain pending.
    
    1.  DISC MANUFACTURING, INC. ET AL. v. MASSEY ET AL., CV-90-H-01029-NE
    (U.S. District Court for the Northern District of Alabama).  On May 21,
    1990, Quixote and DMI filed this lawsuit against Disctronics Limited,
    Disctronics (US) Inc., Disctronics, Inc., Moray Investments Limited
    ("Moray"), Memory-Tech, Inc. ("Memory-Tech") and individuals Peter Massey,
    Kevin Donovan, David Mackie, and Douglas Adams.  This lawsuit alleges that 
    the individual defendants, each a DMI director until April 30, 1990, had in
    concert with Disctronics Limited and its affiliated companies,
    misappropriated DMI's corporate opportunity to acquire Memory-Tech, a
    competing compact disc manufacturer located in Plano, Texas.  Rather than
    present this opportunity to DMI, the Disctronics Group and the individual
    directors caused Disctronics Limited to acquire Memory-Tech through a new
    subsidiary, Moray.  While DMI and Memory-Tech were operated as an
    integrated company between March 2, 1990 (the acquisition date of
    Memory-Tech) and April 30, 1990, Memory-Tech competed with DMI after April
    30, when Quixote gained control of DMI pursuant to the Work-Out
    Agreement.  In this lawsuit, Quixote and DMI sought a constructive trust
    over Memory-Tech in favor of DMI, along with unspecified damages.
    
    The lawsuit also alleges that the defendants had violated DMI's federal
    trademark rights in the name "Disctronics", by operating Memory-Tech under
    the "Disctronics" name in competition with DMI.  DMI was known as
    Disctronics Manufacturing, Inc. and used the trade name Disctronics, Inc.
    from approximately 


                                     - 12 -


<PAGE>


    June, 1988 until May 18, 1990.  The complaint seeks both
    money damages and equitable relief.
    
    On June 11, 1990, the Court dismissed the claims against the individual
    defendants because of a lack of federal jurisdiction, and declined to
    exercise pendant jurisdiction over the state law corporate opportunity
    claims.  Currently, Quixote and DMI's federal trademark claims are their
    only claims now pending in the federal district court action.
    
    On December 31, 1991 the remaining corporate defendants filed affirmative
    defenses to DMI's claims and certain of the defendants filed counterclaims
    alleging breach of contract, economic duress, tortious interference with
    contract and business relations, unjust enrichment, fraud, unfair
    competition and seizure of corporate opportunity among other claims.  On
    January 17, 1992 DMI filed an answer and affirmative defenses to the
    counterclaim and also moved to dismiss the counterclaim and affirmative
    defenses, which motion was denied on February 10, 1992.  On September 25,
    1992, the Court dismissed all of the defendants' state law counterclaims,
    in order to allow those claims to be resolved in the parallel state court
    action.  This left only the parties' federal trademark claims, which were
    stayed, pending resolution of the state court action.
    
    2.  DISC MANUFACTURING, INC. ET AL. v. MASSEY ET AL., CV90-1214L (Madison
    County Circuit Court, Alabama).  On June 13, 1990, DMI and Quixote refiled
    their state law corporate opportunity claims, along with a claim under the
    Alabama trademark law, in the Circuit Court for Madison County, Alabama
    (Huntsville), the jurisdiction in which DMI is located.  Quixote and DMI
    asked the Court to impose a constructive trust on Memory-Tech in addition
    to an unspecified amount of damages.  The Court initially granted a
    temporary restraining order precluding defendants from transferring any
    interest in Memory-Tech pending the Court's determination following a
    preliminary injunction hearing.  Following the preliminary injunction
    hearing, on July 30, 1990, the Court granted the motion for preliminary
    injunction.  In connection with the preliminary injunction and pending the
    final outcome of the action, Quixote and DMI were required to post a $6
    million certificate of deposit as injunction security.  The defendants
    appealed the entry of the preliminary injunction and on May 15, 1992 the
    Alabama Supreme Court reversed the trial court's issuance of the
    injunction, remanding the case for further proceedings.  Quixote's motion
    for a rehearing was denied on July 10, 1992.  On May 21, 1992 defendants
    filed a Motion for Partial Summary Judgment on all counts of the complaint
    asserting breaches of fiduciary duty and using as its basis the Alabama
    Supreme Court decision.
    
    In addition, on March 4, 1991, the corporate defendants filed a
    counterclaim against Quixote, DMI and James H. DeVries.  The counterclaim
    was made in twelve counts, including breach of the covenant of good faith
    and fair dealing, economic duress (as to the validity of the Work-Out
    Agreement), tortious interference with contract and business relations,
    unjust enrichment (also a claim with respect to the validity of the Work-Out
    Agreement), fraud, breach of contract (not under the Work-Out Agreement),
    account stated, claim for money had and received, unfair competition
    (with respect to the "Disctronics" trademark), state dilution claim,
    breach of fiduciary duty by Mr. DeVries and seizure of corporate
    opportunity by Quixote, and a claim for wrongfully seeking injunctive
    relief.
    
    The counterclaim sought damages of $73.8 million, to invalidate the
    Work-Out Agreement, punitive damages and other relief.  The Company and DMI
    filed motions to dismiss the counterclaim.
    
    On September 9, 1992, Quixote and DMI filed three additional counts to
    specifically enforce a Settlement Agreement reached in June, 1991.  On June
    21, 1993, the Court entered judgment against Quixote and DMI on those
    settlement counts, in response to defendants' Motion for Summary Judgment. 
    Quixote and DMI filed a motion for reconsideration of that ruling.


                                     - 13 -

<PAGE>


    In April 1993, the Company and DMI filed a First Amended Complaint which
    added claims for unjust enrichment, fraud and tortious interference. 
    Defendants moved to dismiss the First Amended Complaint.
    
    In May 1995, the Circuit Court ruled on various outstanding motions.  The
    Court dismissed all of the Defendants' claims except the following claims: 
    tortious interference with contract and business relations; fraud; breach
    of contract regarding a $300,000 escrow; a state dilution claim; and a
    claim for wrongfully seeking injunctive relief.
    
    In its May 1995 Order, the Court also dismissed all of the Company's and
    DMI's corporate opportunity claims based on breaches of fiduciary duties,
    along with the claims for unjust enrichment.  The Court also denied the
    Company's and DMI's motion for a new trial with respect to the Court's
    prior summary judgment on the Company's and DMI's settlement-related
    counts.  This left two counts of the Company's and DMI's First Amended
    Complaint in the case:  a count for tortious interference with contract and
    business relations and a count for fraud.  Both parties appealed the
    Court's May 1995 ruling.  In September 1996 the Alabama Supreme Court ruled
    on the appeal, reversing the dismissal of the Company's claims and
    upholding the dismissal of all but one of the Defendants' claims which had
    been at issue.  Consequently, the Company and DMI have pending claims for
    breach of fiduciary duty, tortious interference and fraud.  The defendants
    pending claims are for wrongful injunction, "palming off", fraud and breach
    of contract.
    
    In March 1996, the Court approved DMI's substitution of a $6,000,000 surety
    bond backed by a $2,000,000 letter of credit to replace the certificate of
    deposit posted with the Alabama Circuit Court as injunction security. 
    Court ordered mediations have not been successful.
    
B.  REPETITIVE STRESS INJURY LITIGATION.  Stenograph Corporation, a 
    discontinued operation, is one of a number of manufacturers of keyboard 
    and other equipment that have been sued by individuals for arm, wrist 
    and hand injuries, including carpal tunnel syndrome.  All twenty-nine 
    cases filed to date against Stenograph, and in some cases the Company, 
    contend that the Stenograph machine (or other keyboard equipment) was 
    defectively designed and that Stenograph failed to provide adequate 
    warnings about how the equipment should be used to avoid injury. The 
    cases request actual damages, in some cases specified as ranging from
    $500,000 to $1,000,000, and, in most of the cases, punitive damages, with 
    some cases specifying an amount of $10,000,000.  All of the cases have 
    been referred to the Company's insurance carriers and, at this time, 
    the Company believes that liability resulting from these cases, if any, 
    (excluding punitive damages) will be covered by its insurance policies. 
    The cases are in the discovery stage.
    
C.  RESORT VIDEO LTD. v. LASERVIDEO, INC.  In September 1990, DMI was sued 
    by Resort Video, Ltd. in the Superior Court of the State of California 
    for the County of Los Angeles in an action entitled RESORT VIDEO, LTD. v. 
    LASERVIDEO, INC., No. 74659.  Resort Video, a former start-up company,
    claimed DMI failed to produce certain video discs on schedule, thereby
    injuring its business.  After a trial, on August 25, 1992, the jury 
    awarded   Resort Video $975,000 in damages.  DMI moved for a new trial 
    which was granted in October 1992.  Plaintiff appealed that decision 
    and DMI cross-appealed the jury's decision.  In June 1995 the California 
    Court of Appeals affirmed the trial court's order granting a new trial 
    based on excessive damages.  Resort Video's petition for a rehearing was 
    denied.  No trial date has been set.
     
D.  THOMSON S.A. v TIME WARNER, ET AL.  In February 1994, Disc Manufacturing,
    Inc., Quixote Corporation and a number of other companies were sued by
    Thomson S.A. of France in the United States District Court for the District
    of Delaware in an action entitled THOMSON S.A. v. TIME WARNER, INC., ET
    AL., No 94-83.  The complaint charged that the defendants infringed four
    Thomson patents by making and selling audio compact discs and requested an
    order prohibiting defendants 


                                     - 14 -


<PAGE>


    from making or selling compact discs which infringe on the patents.
    No specified damages were asked for although the complaint asked 
    that damages be trebled because it alleged the infringement was 
    willful.  In the fall of 1994, the Denon and Time Warner defendants
    entered into consent judgments with the plaintiff.  After a trial, in 
    July 1996, the jury found that the Thomson patents were invalid.
    Thomson has moved for judgment as a matter of law or, in the 
    alternative, for a new trial and a decision is pending.
        
E.  SHERRELL SEARS v. ENERGY ABSORPTION SYSTEMS, INC.  In June 1994, the 
    Company, Energy Absorption Systems, and two employees or former 
    employees were sued in an action entitled SHERRELL AND ROY SEARS v. 
    ENERGY ABSORPTION SYSTEMS, INC., QUIXOTE CORPORATION, GERALD HAND, 
    KEN WIMMER, UPJOHN COMPANY, IPI ISOFOAM SYSTEMS AND RELIANCE 
    INSURANCE COMPANY ET AL., in the Circuit Court of St. Clair County, 
    Alabama, No:CV94-128.  Plaintiff claimed that she suffered a miscarriage 
    caused by her exposure to fumes while working for Energy.  The complaint 
    contained alternating theories of workmen's compensation, tort, product 
    liability, co-employee liability and/or negligent safety inspections.
    No monetary award was specified.  In March 1995, the workmen's 
    compensation claims against Energy were settled for a nominal amount.
    In August 1995 the Court granted Energy's motion for summary judgment, 
    dismissing the claims against the Company and the Energy employees.
    That decision was subsequently affirmed on appeal by the Alabama Supreme 
    Court.

F.  JEFFREY SMITH v. ENERGY ABSORPTION SYSTEMS, INC.  In February 
    1994, Energy was sued in an action entitled JEFFREY AND JODY SMITH 
    v. COMMONWEALTH OF PENNSYLVANIA, DEPARTMENT OF TRANSPORTATION AND 
    ENERGY ABSORPTION SYSTEMS, INC., in the Court of Common Pleas of 
    Allegheny County, Pennsylvania, No. GD941220.  The complaint alleges 
    that leaking fluid from a crash cushion manufactured by Energy 
    Absorption Systems caused plaintiff to lose control of his 
    motorcycle and incur injuries.  No monetary award is specified.  The
    case has been referred to the Company's insurance carriers and discovery 
    is proceeding.  At this time, the Company believes that liability 
    resulting from this case, if any, will be covered by its insurance 
    policies.
        
G.  DISCOVISION ASSOCIATES v. DISC MANUFACTURING, INC.  In January 1995,
    Disc Manufacturing, Inc. was served in an action entitled 
    DISCOVISION ASSOCIATES v. DISC MANUFACTURING, INC., Case No. 
    95-21, U.S. District Court for the District of Delaware.  The 
    complaint alleges that DMI is infringing six DiscoVision patents 
    and seeks injunctive relief and unspecified damages, including 
    punitive damages, against DMI.  In August 1995, DiscoVision was granted
    leave to amend its complaint to allege infringement by DMI of four 
    additional patents.  Discovery is proceeding and trial is set to 
    begin in September 1997.

H.  DISC MANUFACTURING, INC. v. PIONEER AND DISCOVISION.  In January 
    1995, DMI filed a complaint against Pioneer Electronic Corp., 
    Pioneer Electronics (USA) Inc., Pioneer Capital Inc., and 
    DiscoVision Associates in the U.S. District Court for the Central 
    District of California, Case No. 95-0306, alleging violations of the
    antitrust laws and acts of unfair competition based on unlawful 
    activities and anticompetitive tactics involving patents related 
    to optical disc technology. DMI's complaint seeks damages, 
    including punitive damages, and injunctive relief. This case has 
    been transferred to the District Court in Delaware and consolidated
    with DiscoVision Associates' case against DMI pending in that 
    jurisdiction (described in G. above).
    
I.  ESTATE OF THIEL v. ENERGY ABSORPTION SYSTEMS, INC.  In December 
    1994, Energy Absorption Systems, Inc. was served in an action 
    entitled FREDERICK W. THIEL AND MAUREEN THIEL v. SLATTERY 
    ASSOCIATES ET AL., Superior Court of New Jersey, Docket No. 
    MRS-L-1431-94.  The complaint arises from a March 1992 accident in 
    which the decendent lost control of his car and allegedly struck one
    of Energy's crash cushions.  The complaint seeks unspecified damages 
    from Energy and numerous defendants, including the State of New 
    Jersey, the U.S. Federal 
    

                                     - 15 -


<PAGE>


    Highway Administration and various other governmental entities.  The Company
    has referred the case to its insurance carrier and discovery is proceeding.
    At this time, the Company believes that liability resulting from this case,
    if any, will be covered by its insurance policies.
    
J.  ENERGY ABSORPTION SYSTEMS, INC. v. ROADWAY SAFETY.  In April 1993, 
    Energy filed suit in U.S. District Court for the Northern District 
    of Illinois in an action entitled ENERGY ABSORPTION SYSTEMS, INC. 
    v. ROADWAY SAFETY SERVICE, INC., No. 93C 2147 for infringement of 
    Energy's U.S. Patent No. 4,289,419 seeking damages and an 
    injunction.  Roadway counterclaimed for a declaratory judgment of non-
    infringement and invalidity.  In February 1996 the Court entered 
    judgment in favor of Roadway, holding that Energy's patent was 
    invalid and not infringed and awarded attorneys' fees and costs to 
    Roadway.  The Court later determined the award to be $280,386.
    Energy has appealed and a decision is pending.
    
K.  MICRO DYNAMICS v. STENOGRAPH CORPORATION.  In 1994, Micro Dynamics, 
    Ltd. sued Stenograph Corporation d/b/a Integrated Information 
    Services, a discontinued operation, in an action entitled MICRO 
    DYNAMICS, LTD. v. COMPULITS, INC. AND STENOGRAPH CORPORATION, U.S. 
    District Court for the District of Maryland, Civil Action No. 
    CD-94-1805, for copyright infringement, trademark infringement,
    disclosure and misappropriation of trade secrets and quantum meruit, all 
    arising from IIS' use of certain software licensed by Micro 
    Dynamics. Stenograph has denied the allegations and asserted 
    various affirmative defenses and a counterclaim for intentional 
    interference with two contracts between IIS and customers, unfair 
    competition, breach of contract and quantum meruit. Both sides 
    seek damages in excess of $1 million.  Stenograph has filed a motion for 
    summary judgment on all of Micro Dynamics' claims and a decision 
    is pending. Discovery is proceeding on Stenograph's counterclaims.
    
L.  ERNEST CHICO v. THE STATE OF INDIANA, ENERGY ABSORPTION SYSTEMS, 
    INC. AND HOOSIER COMPANY (Indiana Superior Court).  On April 12, 
    1996 Energy Absorption Systems, Inc. was served in this action 
    which arises from an accident in which the plaintiff hit one of 
    Energy's crash cushions.  The Company has referred the case to its 
    insurance carrier and at this time believes that liability resulting 
    from this case will be covered by its insurance policies.

M.  XEROTEX ET AL. v. INTEGRATED INFORMATION SERVICES, Case No. 96 Civ. 
    681 (U.S. District Court for the District of New Jersey).  In 
    February 1996, the Company was served in this action which arises 
    from the purchase of certain software by Integrated Information 
    Services, Inc. ("IIS") prior to the Company's sale of IIS. The 
    complaint alleges breach of contract by IIS for its alleged failure to 
    market the software and make contractual payments.  IIS has 
    answered the complaint and asserted a counterclaim against 
    plaintiffs for breach of warranty, breach of contract, breach of 
    the implied covenant of good faith and fair dealing and breach of 
    the purchase agreement.  Discovery is proceeding.
    
    The Company is involved in other legal actions, believes it has 
    defenses for all  claims, and is vigorously defending the actions.
    In the opinion of management, based on the advice of legal counsel, 
    liabilities, if any, arising from the Company's legal actions should 
    not have a material effect on the Company's results of operations or 
    financial condition.
    
Item 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
------------------------------------------------------------

There were no matters submitted to a vote of security holders during the fourth
quarter of fiscal 1996.


                                     - 16 -

<PAGE>


                                     PART II


Item 5.  MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER 
MATTERS
-------------------------------------------------------------------------------

The Company's common stock is quoted on the National Association of 
Securities Dealers Automated Quotation System (NASDAQ) under the symbol 
QUIX.

Set forth are the daily high and low last sales prices for the Company's 
common stock for the periods indicated, as reported by the National 
Quotations Bureau, Inc.  These prices represent quotations between 
dealers in securities, do not include retail markdowns or commissions, 
and do not necessarily represent actual transactions.

<TABLE>
<CAPTION>

Quarter Ending          9/30       12/31        3/31        6/30
--------------        -------     -------     --------    -------
<S>                   <C>         <C>         <C>         <C>

FISCAL 1996
High                  $13-1/4     $    12     $ 8-1/2     $ 8-1/2
Low                    10-1/2       7-1/4           6       5-3/4

FISCAL 1995
High                  $22-1/4     $19-1/8     $12-1/2     $12-3/4
Low                    17-1/2    10-15/16       9-1/4       9-1/4

</TABLE>

The current quoted price of the stock is listed daily in The Wall Street 
Journal in the NASDAQ National Market System section.  As of August 5, 
1996, there were 1,900 shareholders of record.

DIVIDEND POLICY
---------------

During 1996, the Company declared semi-annual cash dividends of twelve 
cents per share each.  During 1995, the Company declared semi-annual 
cash dividends of eleven cents per share each.


                                     - 17 -

<PAGE>


Item 6.  SELECTED FINANCIAL DATA
--------------------------------
SELECTED FINANCIAL DATA


Dollar amounts in thousands, except per share data
<TABLE>
<CAPTION>
For the years ended June 30,          1996       1995       1994       1993       1992
----------------------------      --------   --------   --------   --------   --------
<S>                               <C>        <C>        <C>        <C>        <C>

Operating results:
Net sales........................$ 129,159  $ 133,818  $ 126,618  $ 106,061  $   94,591
Gross profit.....................   38,973     46,147     50,903     43,331      37,519
Selling and administrative expenses 29,231     25,612     23,233     20,002      15,303
Research and development expenses    1,536      1,545      1,978      2,092       1,391
Other income (expense)...........   (4,702)    (3,406)    (2,395)    (2,445)     (3,357)
Earnings from continuing operations  2,574     10,707     15,623     10,302      10,028
Net earnings (loss)..............   (9,892)     5,950     11,644      9,441       7,967
Cash dividends per common share..      .24        .22        .21        .20


Per share data:
Primary earnings from continuing
  operations.....................$     .32  $    1.32  $    1.94  $    1.31  $     1.30
Net earnings (loss)..............    (1.24)       .73       1.44       1.20        1.03
Book value per common share......     5.99       7.49       6.94       5.53        4.51

Weighted average common and common
  equivalent shares outstanding  8,003,924  8,100,385  8,066,192  7,867,658    7,742,825


Financial position:
Total assets.....................$ 129,829  $ 164,835  $ 116,602  $ 104,591  $   95,355
Working capital..................   19,665      2,319     13,158     10,691      30,087
Net property, plant and equipment   88,326     87,031     53,534     53,343      46,639
Long-term debt, net..............   58,000     68,000     38,975     40,000      47,187
Shareholders' equity.............   47,619     58,915     54,069     41,898      33,583

</TABLE>

Note: Operating results and financial position for all periods presented 
have been restated to reflect the businesses of the Legal Technologies 
segment as discontinued operations.


Item 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
--------------------------------------------------------------------------------
1996 COMPARED TO 1995
---------------------

The Company's sales for 1996 decreased 3% to $129,159,000 from $133,818,000 
in 1995 due to reduced sales at Disc Manufacturing, Inc. (DMI).  Sales at DMI 
decreased 6% in 1996 to $82,409,000 from $87,296,000 in 1995 due principally 
to the loss of a major customer, BMG Music, during 1996.  Sales to BMG Music 
decreased $22,874,000 to $10,410,000 in 1996 from $33,284,000 in 1995.  As a 
result, CD-Audio unit sales decreased 40% in 1996 from 1995.  CD-ROM unit 
sales increased 78% during 1996 from 1995 reflecting continued growth in that 
market. As a result of declines in the average unit selling price of these 
products, CD-Audio sales dollars declined 42% and CD-ROM sales dollars only 
increased 44% during 1996 from 1995.  Sales at Energy Absorption for 1996 
were $46,750,000, up slightly from $46,522,000 for 1995.  Sales of Energy's 
permanent crash cushions and parts increased but were largely offset by a 
decrease in truck-mounted attenuator (TMA) sales.

                                     - 18 -

<PAGE>


The gross profit margin in 1996 decreased to 30.2% from 34.5% in 1995 
due to margin reductions at DMI.  DMI's gross profit margin decreased as 
a result of a decrease in the selling prices of its products, 
particularly CD-ROM products, as well as from volume inefficiencies as a 
result of its capacity expansion concurrent with the loss of a major 
customer.  DMI also had a reduction in gross profit margin due to a 
change in packaging sales mix.  The Company expects to experience 
continued pressure on disc selling prices which may have a limiting 
effect on its future gross profit margins.  Energy Absorption's gross 
profit margin for 1996 increased slightly due to a change in product mix 
and to less outsourcing of component parts than in 1995.

Selling and administrative expenses in 1996 increased 14% to $29,231,000 
from $25,612,000 in 1995.  DMI's selling and administrative expenses 
increased principally due to an increase in legal expense related to two 
legal settlements and to an increase in bad debt expense as DMI's 
customer mix has shifted from the larger music companies to smaller 
CD-ROM companies.  Energy Absorption's selling and administrative 
expenses increased due to increased marketing expenses and to the 
write-off of its investment in a sewer rehabilitation technology.

Research and development expenses in 1996 were $1,536,000 compared to 
$1,545,000 in 1995.  Research and development on Energy's sewer 
rehabilitation technology was suspended in 1996 but was offset by an 
increase in new product development at Energy that will result in the 
introduction of a new generation of products that will meet or exceed 
revised U.S. highway safety standards known as NCHRP 350.

Interest income in 1996 was $523,000 compared to $392,000 in 1995 due to 
an increase in the rate of interest earned on its $6 million restricted 
certificate of deposit.  In the third quarter, this CD was redeemed and 
replaced with a surety bond.  Interest expense in 1996 increased 59% to 
$6,130,000 from $3,859,000 in 1995.  This was due to the increase in the 
average long-term debt outstanding compared to last year.  The Company 
recognized a $1,634,000 gain on asset sales which include the sale of 
its 40% interest in Quantic Industries, Inc. ($1,287,000) and from the 
sale of a patent ($347,000).  Other expenses in 1996 increased from 1995 
due to an increase in goodwill amortization and from a decrease in 
royalty income as a result of the patent sale.

During 1996 the Company discontinued the operations of its legal 
technologies businesses, which had been involved in the development, 
manufacture and sale of products and systems for the legal community.  
As a result, the Company recorded a loss of $12,466,000 (net of income 
tax benefits of $8,000,000) for the operating losses of these businesses 
through the date of disposition and for the loss on their disposition.  
These results are presented as discontinued operations in the Company's 
Consolidated Statements of Operations.  Under multiple arrangements the 
Company sold certain assets of this segment for an aggregate sales price 
of $5,981,000 and the assumption of certain liabilities. Assets and 
liabilities retained by the Company at June 30, 1996 include accounts 
receivable, accounts payable, certain repetitive stress injury 
litigation and liabilities under certain lease obligations.


1995 COMPARED TO 1994
---------------------

The Company's sales for 1995 increased 6% to $133,818,000 from 
$126,618,000 in 1994 due to revenue growth at both of the Company's 
business segments.  Sales at Energy Absorption for 1995 increased 7% to 
$46,522,000 from $43,433,000 in 1994 due principally to the inclusion of 
a full year of sales at Safe-Hit Corporation, a manufacturer of flexible 
guide posts, acquired in December 


                                     - 19 -


<PAGE>


1993. Safe-Hit contributed sales of $5,304,000 in 1995 compared to sales 
of $2,799,000 in 1994.  DMI sales for 1995 increased 5% to $87,296,000 
from $83,185,000 in 1994 due to increased unit sales of its CD-ROM 
discs.  CD-ROM unit sales in 1995 increased 53% from 1994 while CD-Audio 
unit sales in 1995 increased 2% from 1994.  These increases in unit 
volumes were offset somewhat by declines in the average unit selling 
prices of these products resulting in CD-ROM sales dollars increasing 
21% from 1994 and CD-Audio sales dollars decreasing 5%.

The gross profit margin in 1995 decreased to 34.5% from 40.2% in 1994 
due to margin reductions at DMI.  DMI's gross profit margin decreased as 
a result of a decrease in the average unit selling price of its 
products, particularly CD-ROM products, due to competition.  This was 
offset somewhat by volume efficiencies. Energy Absorption's gross profit 
margin decreased as a result of an unfavorable change in product mix and 
to the outsourcing of several manufactured component parts.  The 
outsourcing of these component parts continued until Energy Absorption's 
plant expansion was completed during the first half of fiscal 1996. 
Energy Absorption's gross profit margin was also reduced due to lower 
gross profit margins at Safe-Hit Corporation.

Selling and administrative expenses in 1995 increased 10% to $25,612,000 
from $23,233,000 in 1994 attributable principally to DMI.  DMI's selling 
and administrative expenses increased due to increases in CD-ROM selling 
and marketing expenses and additional legal expenses.  Energy 
Absorption's selling and administrative expenses also increased but to a 
lesser extent due to the inclusion of selling and administrative 
expenses at Safe-Hit Corporation.

Research and development expenses in 1995 decreased 22% to $1,545,000 
compared to $1,978,000 in 1994.  This was due to a decrease in R&D at 
Energy Absorption as a result of reduced expenditures on its sewer 
rehabilitation technology.

Interest income in 1995 was $392,000 compared to $298,000 in 1994 
reflecting an increase in interest rates on invested funds.  Interest 
expense increased 26% in 1995 to $3,859,000 from $3,060,000 in 1994.  
This was due principally to the increase in long-term debt but also to 
an increase in interest rates.  Other income in 1995 was $61,000, down 
from income of $367,000 in 1994 as a result of a gain on the sale of a 
stock investment which occurred in 1994.


LIQUIDITY AND CAPITAL RESOURCES
-------------------------------

The Company has cash of $2,250,000 and additional funds of $25,000,000 
available under its bank arrangements.  Operating activities were a 
source of cash for the Company providing cash of $13,144,000.

Cash of $6,440,000 was used during 1996 for investing activities.  The 
Company's primary investing activity was the purchase of $24,419,000 in 
plant and equipment.  These capital expenditures were made primarily at 
DMI for the final phase of its expansion program.  The Company received 
an aggregate of $15,991,000 in connection with the sales of its 40% 
investment in Quantic Industries, Inc., its discontinued operations and 
a patent.

In fiscal 1996, the Company began a strategy of discontinuing and disposing 
of unprofitable businesses and dedicating its resources to maintain and 
expand its more profitable businesses. The Company believes that this 
strategy has had the effect of increasing earnings and improving both 
financial position and liquidity. The discontinuation of Legal Technologies, 
Inc. in September 1995 resulted in both the containment of losses ($7.6 
million pretax in fiscal 1995) and cash outflows to support that business. In 
addition, the resulting sale of the various LTI companies generated cash 
proceeds of approximately $7 million during fiscal 1996.

Financing activities used cash of $6,529,000 principally from payments 
made on both the Company's revolving credit note ($9,000,000) and 
convertible debentures ($1,975,000) satisfying the Company's sinking 
fund requirements for both fiscal 1996 and 1997.  Proceeds from the 
redemption of a certificate of deposit generated $6,000,000.

During 1997, the Company anticipates the need for approximately 
$8,000,000 in cash for capital expenditures.  The Company may also need 
additional cash for the acquisition of businesses that complement its 
existing operating segments. 


                                     - 20 -


<PAGE>


Also, each of the Company's operating segments will require additional 
investments in working capital to maintain growth.  These expenditures 
will be financed either through cash generated from operations or from 
borrowings on the Company's revolving credit note.  The Company believes 
its cash generated from operations and funds available under its 
existing credit facility are sufficient for all planned operating and 
capital requirements.

See note 11 to the Consolidated Financial Statements for discussion regarding 
the Company's existing litigation.

IMPACT OF RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS NOT YET EFFECTIVE 
---------------------------------------------------------------------
Reference is made to footnote #2 of the Notes to the Consolidated Financial 
Statements.

Item 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
----------------------------------------------------


Report of Independent Accountants


To the Shareholders and the Board of Directors
of Quixote Corporation

We have audited the consolidated balance sheets of Quixote Corporation 
and Subsidiaries as of June 30, 1996 and 1995, and the related 
consolidated statements of income, shareholders' equity and cash flows 
for each of the three years in the period ended June 30, 1996.  We have 
also audited the financial statement schedule listed in Park IV of Form 
10-K, Item 14(a)2 for each of the three years in the period ended June 
30, 1996.  These financial statements and financial statement schedule 
are the responsibility of the Company's management. Our responsibility 
is to express an opinion on these financial statements and financial 
statement schedule based on our audits.

We conducted our audits in accordance with generally accepted auditing 
standards.  Those standards require that we plan and perform the audit 
to obtain reasonable assurance about whether the financial statements 
are free of material misstatement.  An audit includes examining, on a 
test basis, evidence supporting the amounts and disclosures in the 
financial statements.  An audit also includes assessing the accounting 
principles used and significant estimates made by management, as well as 
evaluating the overall financial statement presentation. We believe that 
our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present 
fairly, in all material respects, the consolidated financial position of 
Quixote Corporation and Subsidiaries as of June 30, 1996 and 1995, and 
the consolidated results of their operations and their cash flows for 
each of the three years in the period ended June 30, 1996 in conformity 
with generally accepted accounting principles.  In addition, in our 
opinion, the financial statement schedule referred to above, when 
considered in relation to the basic financial statements taken as a 
whole, present fairly, in all material respects, the information 
required to be included therein.

/s/Coopers & Lybrand L.L.P.

Chicago, Illinois
August 12, 1996


                                     - 21 -


<PAGE>


CONSOLIDATED STATEMENTS OF OPERATIONS

Dollar amounts in thousands, except per share data

<TABLE>
<CAPTION>

For the years ended June 30,                 1996          1995          1994
----------------------------------     ----------    ----------    ----------
<S>                                    <C>           <C>           <C>
Net sales..............................$  129,159    $  133,818    $  126,618
Cost of sales..........................    90,186        87,671        75,715
                                       ----------    ----------    ----------
Gross profit...........................    38,973        46,147        50,903
Operating expenses:
  Selling and administrative...........    29,231        25,612        23,233
  Research and development.............     1,536         1,545         1,978
                                       ----------    ----------    ----------
                                           30,767        27,157        25,211
                                       ----------    ----------    ----------
Operating profit.......................     8,206        18,990        25,692
                                       ----------    ----------    ----------


Other income (expense):
  Interest income......................       523           392           298
  Interest expense.....................    (6,130)       (3,859)       (3,060)
  Gain on sale of assets...............     1,634
  Other................................      (729)           61           367
                                       ----------    ----------    ----------
                                           (4,702)       (3,406)       (2,395)
                                       ----------    ----------    ----------
Earnings from continuing operations
before provision for income taxes......     3,504        15,584        23,297
Provision for income taxes.............       930         4,877         7,674
                                       ----------    ----------    ----------
Earnings from continuing operations....     2,574        10,707        15,623
Discontinued operations:
  Loss from operations, net of 
   income taxes........................    (1,553)       (4,757)       (3,979)
  Loss on disposal, net of income taxes   (10,913)
                                       ----------    ----------    ----------
  Loss from discontinued operations....   (12,466)       (4,757)       (3,979)
                                       ----------    ----------    ----------
Net earnings (loss)....................$   (9,892)   $    5,950    $   11,644
                                       ==========    ==========    ==========

Per share data:
  Primary earnings per share:
   Earnings from continuing operations.$      .32    $     1.32    $     1.94
                                       ==========    ==========    ==========
   Net earnings (loss).................$    (1.24)   $      .73    $     1.44
                                       ==========    ==========    ==========
   Average shares outstanding.......... 8,003,924     8,100,385     8,066,192
                                       ==========    ==========    ==========
  Fully diluted earnings per share:
   Earnings from continuing operations.$      .32    $     1.28    $     1.80
                                       ==========    ==========    ==========
   Net earnings (loss).................$    (1.24)   $      .73    $     1.37
                                       ==========    ==========    ==========
   Average shares outstanding.......... 8,951,562     9,151,701     9,203,492
                                       ==========    ==========    ==========

</TABLE>

The accompanying notes are an integral part of the consolidated 
financial statements.


                                     - 22 -
<PAGE>
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
Dollar amounts in thousands, except per share data          As of June 30,
                                                          1996          1995
                                                    ----------    ----------
<S>                                                 <C>           <C>
Assets
Current assets:
  Cash and cash equivalents.........................$    2,250    $    2,075
  Accounts receivable, net of allowance
    for doubtful accounts of $740 in 1996
    and $810 in 1995................................    22,433        24,564
  Refundable income taxes...........................     3,016
  Inventories.......................................     5,953         7,401
  Deferred income tax assets........................     2,643         1,582
  Other current assets..............................     1,223           779
                                                    ----------    ----------
     Total current assets...........................    37,518        36,401
Property, plant and equipment at cost:
  Land..............................................     6,773         6,325
  Buildings and improvements........................    29,574        24,354
  Machinery and equipment...........................   102,995        94,830
  Furniture and fixtures............................     5,695         4,812
  Leasehold improvements............................       508           501
                                                    ----------    ----------
                                                       145,545       130,822
    Less accumulated depreciation and amortization..   (57,219)      (43,791)
                                                    ----------    ----------
                                                        88,326        87,031
Other assets, including $6,000 restricted 
  certificate of deposit in 1995....................     3,985        21,502
Net assets of discontinued operations...............                  19,901
                                                    ----------    ----------
                                                    $  129,829    $  164,835
                                                    ==========    ==========
Liabilities and Shareholders' Equity
Current liabilities:
  Current portion of long-term debt.................              $      975
  Accounts payable..................................$    3,648        15,715
  Dividends payable.................................       946           861
  Income taxes payable..............................                   4,110
  Accrued expenses:
    Payroll and commissions.........................     2,840         3,032
    Accrued royalty.................................     1,155           972
    Other...........................................     9,264         8,417
                                                    ----------    ----------
      Total current liabilities.....................    17,853        34,082
Long-term debt, net of current portion..............    58,000        68,000
Net liabilities of discontinued operations..........     4,428
Deferred income tax liabilities.....................     1,929         3,838
Commitments and contingent liabilities..............
Shareholders' equity:
  Preferred stock, no par value; authorized 
    100,000 shares; none issued                     
  Common stock, par value $.01-2/3; authorized
    15,000,000 shares;  issued 8,671,101 shares-1996
    and 8,581,416 shares-1995.......................       145           143
  Capital in excess of par value of stock...........    29,751        29,268
  Retained earnings.................................    23,196        34,977
  Treasury stock, at cost, 718,921 shares-1996
    and 1995........................................    (5,473)       (5,473)
                                                    ----------    ----------
      Total shareholders' equity....................    47,619        58,915
                                                    ----------    ----------
                                                    $  129,829    $  164,835
                                                    ==========    ==========
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.

                                     -23-
<PAGE>


CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>


For the three years
ended June 30, 1996
<S>                                                <C>           <C>             <C>      <C>
                                                                    Capital in
Dollar amounts in thousands,                                      Excess of Par  Retained Treasury
except per share data                              Common Stock  Value of Stock  Earnings  Stock
-------------------------------------------------  ------------  --------------  -------- --------
Balances, July 1, 1993.............................         139          26,629   20,726   (5,596)
Exercise of options for 116,096 common shares......           2             481   11,644
Net earnings - 1994................................                              
Declaration of semi-annual cash dividends
  ($0.10 per share and $0.11 per share)............                               (1,621)
Issuance of 29,509 treasury shares for the
  acquisition of Safe-Hit Corporation..............                         221               223
Issuance of 69,358 common shares pursuant to the
  stock retirement plan............................           1           1,195
Conversion of debentures into 1,315 common shares..                          25
                                                   ------------  -------------- -------- --------
Balances, June 30,1994.............................         142          28,551   30,749   (5,373)
Exercise of options for 41,922 common shares.......                         285
Net earnings - 1995................................                                5,950
Declaration of semi-annual cash dividends
  ($0.11 per share each)...........................                               (1,722)
Issuance of 34,679 shares pursuant to the stock
  retirement plan..................................           1             432
Purchase of 6,661 common shares at $15.01 per share                                          (100)
                                                    ------------  -------------- -------- --------
Balances, June 30,1995.............................         143          29,268   34,977   (5,473)
Exercise of options for 55,006 common shares.......           1             250
Net loss - 1996....................................                               (9,892)
Declaration of semi-annual cash dividends
  ($0.12 per share each)...........................                               (1,889)
Issuance of 34,679 shares pursuant to the stock
  retirement plan..................................           1             233
                                                   ------------  -------------- -------- --------
Balances, June 30, 1996
  8,671,101 common shares and 718,921 treasury 
   shares..........................................$        145  $       29,751 $ 23,196 $ (5,473)
                                                   ============  ============== ======== ========

</TABLE>


The accompanying notes are an integral part of the consolidated financial
statements.
                                      -24-
<PAGE>
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                          DOLLAR AMOUNTS IN THOUSANDS
<TABLE>
<CAPTION>
                                                                                 FOR THE YEARS ENDED JUNE 30,
                                                                              ----------------------------------
                                                                                 1996        1995        1994
                                                                              ----------  ----------  ----------
<S>                                                                           <C>         <C>         <C>
Earnings from continuing operations.........................................  $    2,574  $    5,950  $   11,644
Adjustments to reconcile net earnings (loss) to net cash provided by
 operating activities:
  Depreciation and amortization.............................................      14,451      15,583      14,037
  Provision for losses on accounts receivable...............................         (71)        (27)       (423)
  Deferred income taxes.....................................................      (1,909)     (1,081)          4
  Changes in operating assets and liabilities:
    Accounts receivable.....................................................       2,202         (68)     (4,619)
    Inventories.............................................................       1,448      (2,254)        370
    Refundable income taxes.................................................      (3,016)
    Other current assets....................................................      (1,505)       (528)        875
    Accounts payable and accrued expenses...................................      (1,769)      3,542       1,104
    Income taxes payable....................................................      (4,110)        188      (1,993)
  Gain on sale of Quantic Industries, Inc...................................      (1,287)
  Gain on sale of patent....................................................        (347)
  Loss on sewer rehabilitation business.....................................         601
                                                                              ----------
  Net cash from continuing operations.......................................       7,262

Discontinued operations
  Loss from operations, net of income taxes.................................      (1,553)
  Loss on disposal, net of income taxes.....................................     (10,913)
  Depreciation and amortization.............................................       2,025
  Changes in operating assets and liabilities:
    Accounts receivable, net................................................       9,698
    Inventory...............................................................       3,027
    Deferred taxes..........................................................        (855)
    Other current assets....................................................         660
    Property, plant and equipment, net......................................       6,394
    Patents, net............................................................         584
    System software, net....................................................         100
    Goodwill................................................................       1,296
    Accounts payable........................................................      (2,820)
    Accrued expenses........................................................      (5,227)
    Lease obligations.......................................................       3,466
                                                                              ----------
  Net cash from discontinued operations.....................................       5,882
                                                                              ----------  ----------  ----------
      Net cash provided by operating activities.............................      13,144      21,305      20,999
                                                                              ----------  ----------  ----------
Investing activities:
  Purchase of property, plant and equipment.................................     (24,419)    (38,415)    (10,994)
  Proceeds from sale of investment in Quantic Industries, Inc...............       8,050
  Proceeds from sales of discontinued operations............................       5,981
  Proceeds from sale of patent..............................................       1,960
  Capitalized and purchased systems, design and software costs..............                    (308)     (1,529)
  Decrease (Increase) in funds deposited with IDB trustee...................       2,719      (2,719)
  Cash paid for acquired businesses and equity investments..................                  (6,746)     (8,075)
  Other.....................................................................        (731)       (421)
                                                                              ----------  ----------  ----------
      Net cash used in investing activities.................................      (6,440)    (48,609)    (20,598)
                                                                              ----------  ----------  ----------
Financing activities:
  Proceeds from revolving credit agreement..................................      23,000      42,000      11,500
  Payments on revolving credit agreement....................................     (32,000)    (12,000)    (13,800)
  Payments on convertible debentures........................................      (1,975)
  Proceeds from redemption of certificate of deposit........................       6,000
  Payment of semi-annual cash dividend......................................      (1,805)     (1,714)     (1,621)
  Proceeds from exercise of common stock options............................         251         285         483
  Repurchase of common stock for treasury...................................                    (100)
                                                                              ----------  ----------  ----------
      Net cash provided by (used in) financing activities...................      (6,529)     28,471      (3,438)
                                                                              ----------  ----------  ----------
  Net change in cash and cash equivalents...................................         175       1,167      (3,037)
  Cash and cash equivalents at beginning of period..........................       2,075       1,021       4,058
                                                                              ----------  ----------  ----------
  Cash and cash equivalents at end of period................................  $    2,250  $    2,188  $    1,021
                                                                              ----------  ----------  ----------
                                                                              ----------  ----------  ----------
</TABLE>
   The accompanying notes are an integral part of the consolidated financial
                                  statements.

                                                   -25-


<PAGE>

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.  NATURE OF BUSINESS

Quixote Corporation and its subsidiaries operate as a diversified technology
company which develops, manufactures and markets specialized products through
two industry segments.  One segment is involved in the development,
manufacturing and marketing of energy-absorbing highway crash cushions and
related highway safety products for the protection of motorists and highway
workers in principal markets which include both domestic and international
governmental units.  The other segment manufactures music compact discs and CD-
ROM discs for the domestic entertainment, data storage, multimedia and education
markets.

2.  ACCOUNTING POLICIES

The principal accounting policies of the Company are as follows:

CONSOLIDATION

The consolidated financial statements include the accounts of Quixote
Corporation and its wholly-owned subsidiaries.

CASH AND CASH EQUIVALENTS

Cash in excess of operating requirements may be invested in income-producing
investments generally having initial maturities of three months or less.  These
investments are stated at cost, which approximates market value.  The Company
considers these short-term instruments to be cash equivalents.

Cash and cash equivalents in the consolidated statement of cash flows for 1995
includes cash related to discontinued operations.

INVENTORIES

Inventories are valued at the lower of cost (first-in, first-out method) or
market.

PROPERTY, PLANT AND EQUIPMENT

The Company capitalizes expenditures for major renewals and betterments and
charges current operations with the cost of maintenance and repairs.  Provisions
for depreciation and amortization have been computed on the straight-line method
based on the expected useful lives of the assets as indicated below:

    Buildings and improvements          20 to 40 years
    Machinery and equipment              3 to 12 years
    Furniture and fixtures               3 to 10 years
    Leasehold improvements               5 to 10 years

Prior to 1996, machinery and equipment were depreciated over expected useful
lives of 3 to 10 years.  The cost and accumulated depreciation and amortization
relating to assets retired or otherwise disposed of are eliminated from the
respective accounts at the time of retirement or other disposition and any
resulting gain or loss is credited or charged to earnings.

GOODWILL AND PATENTS

Goodwill and patents are amortized on a straight-line basis over lives of 7 to
17 years.  The Company assesses at each balance sheet date whether there has
been a permanent impairment in the value of these assets.  Such assessment
includes consideration of possible obsolescence, demand, new technology,
competition, and other
                                     -26-

<PAGE>

pertinent economic factors and trends that may have an
impact on the value or remaining lives of these assets.

INCOME TAXES

The Company recognizes deferred tax liabilities and assets for the expected
future tax consequences of events that have been included in the financial
statements or tax returns.  Under this method, deferred tax liabilities and
assets are determined based on the difference between the financial statement
and tax bases of assets and liabilities using enacted tax rates in effect for
the year in which the differences are expected to reverse.  In addition, the
amount of any future tax benefits are reduced by a valuation allowance to the
extent such benefits are not expected to be fully realized.

FINANCIAL INSTRUMENTS

The fair value of cash and cash equivalents is assumed to approximate the
carrying value of these assets due to their short maturity.  The fair value of
the Company's convertible debentures is estimated using available market
information.

MANAGEMENT ESTIMATES

The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period. 
Actual results could differ from those estimates.

NET ASSETS/LIABILITIES OF DISCONTINUED OPERATIONS

The Company reclassifies those assets and liabilities associated with a
discontinued business segment as a net amount under the caption "Net Assets (or
Liabilities) of Discontinued Operations" on the accompanying consolidated
balance sheet.

As of June 30, 1996, the Company retained the following (assets) and
liabilities related to the discontinued legal technologies operations:

<TABLE>
<S>                                                        <C>
Deferred Taxes...........................................  $    (863)
Accounts Payable.........................................        100
Lease Obligations........................................      4,275
Sales and other Taxes....................................        150
Severance................................................        400
Other....................................................        366
                                                           ---------
Net Liabilities of Discontinued Operations...............  $   4,428
                                                           ---------
                                                           ---------
</TABLE>

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

Stock-Based Compensation.  Statement of Financial Accounting Standards No. 123,
"Accounting for Stock-Based Compensation," encourages, but does not require,
companies to recognize compensation expense for grants of stock, stock options,
and other equity instruments to employees based on new fair value accounting
rules.  Although expense recognition for employee stock-based compensation is
not mandatory, the pronouncement requires companies that choose not to adopt the
new fair value accounting, to disclose the pro-forma net income and earnings per
share under the new method.  This new accounting principle is effective for the
Company's fiscal year ending June 30, 1997.  The Company believes that adoption
will not have a material impact on its financial position or results of
operations.

In March 1995, the Financial Accounting Standards Board issued Statement of 
Financial Accounting Standard No. 121, "Accounting for the Impairment of 
Long-Lived Assets and for Long-Lived Assets to be Disposed of." The statement 
requires that long-lived assets and certain identifiable intangibles to be 
held and used by an entity be reviewed for impairment whenever events or 
changes in circumstances indicate that the carrying amount of an asset may 
not be recoverable. Impairment is evaluated by comparing future cash flows 
(undiscounted and without interest charges) expected to result from the use 
of the asset and its eventual disposition to the carrying amount of the 
asset. This new accounting principle is effective for the Company's fiscal 
year ending June 30, 1997. The Company believes that adoption will not have a 
material impact on its financial position.

RECLASSIFICATIONS

Certain amounts for the years ended June 30, 1995 and 1994 were reclassified to
conform to the current year presentation.

NOTE 3.  ACQUISITIONS, DISPOSITIONS AND DISCONTINUED OPERATIONS

In December 1993 the Company acquired the stock of Safe-Hit Corporation, a
manufacturer of flexible guide post systems and portable sign systems for
highway and parking lot applications.  The operating results of Safe-Hit
Corporation have been included in the Company's consolidated results of
operations since the date of acquisition.

In April 1995 the Company acquired a 40% common stock interest in Quantic
Industries, Inc. for $6.7 million including expenses.  The investment in
Quantic, a manufacturer of electronic and pyrotechnic devices, was accounted for
under the equity method of accounting.  The cost in excess of the Company's pro
rata share of the net assets of Quantic (approximately $4 million) is included
in other assets in 1995.  In May 1996, the Company agreed to sell its 40%
interest to the majority shareholders in Quantic for $8,050,000 cash.  A gain of
$1,287,000 was realized on the sale and is included in other income for 1996.
                                     -27-

<PAGE>

In January 1996, Energy Absorption sold to Barrier Systems, Inc. certain patents
related to its movable traffic barrier system.  The sale price of $1,960,000
resulted in a gain of $347,000 which is included in other income for 1996.

During 1996 the Company discontinued the operations of its legal technologies
businesses, which had been involved in the development, manufacture and sale of
products and systems for the legal community.  Under multiple arrangements the
Company sold certain assets and liabilities for an aggregate sales price of
$5,981,000.  Assets and liabilities retained by the Company at June 30, 1996
include accounts receivable, accounts payable, certain repetitive stress injury
litigation as well as liabilities under certain lease obligations.  These
remaining assets and liabilities are valued based upon management's estimates,
utilizing current available information as of the balance sheet date.  It is
reasonably possible, however, that these estimates could change in the near
term.

The results of operations of the legal technologies segment and the loss on its
disposition are presented as discontinued operations in the accompanying
consolidated statements of operations.  The income tax benefits for the results
of discontinued operations for the years ended 1996, 1995 and 1994 are $725,000,
$1,652,000 and $1,479,000 respectively.  The loss on disposal of $10,913,000 is
net of income tax benefits of $7,275,000.  Net sales for the discontinued
businesses were $27,510,000 (1996), $51,593,000 (1995) and $50,320,000 (1994).

The accompanying consolidated balance sheets and consolidated statements of
operations have been restated in order to present the legal technologies segment
as a discontinued operation for accounting purposes.


NOTE 4.  INVENTORIES

Inventories consist of the following at June 30:

Dollar amounts in thousands                      1996          1995
----------------------------------------   ----------    ----------
Finished goods..........................   $      944    $    1,172
Work in process.........................        1,052         1,034
Raw materials...........................        3,957         5,195
                                           ----------    ----------
                                           $    5,953     $   7,401
                                           ----------    ----------

NOTE 5.  LONG-TERM DEBT

Long-term debt consists of the following at June 30:

Dollar amounts in thousands                      1996          1995
----------------------------------------   ----------    ----------
Revolving credit facility due October 31,
  1998, interest at variable rates.........$   40,000    $   49,000
8% Convertible subordinated debentures 
  due 2011, interest due semi-annually, 
  principal payable in annual sinking 
  fund installments of $1,000..............    18,000        19,975
                                           ----------    ----------
  Total long-term debt.....................    58,000        68,975
  Less current portion.....................                    (975)
                                           ----------    ----------
  Long-term debt, net......................$   58,000    $   68,000
                                           ----------    ----------

                                        -28-

<PAGE>

The Company has a three-year unsecured revolving credit agreement with three
banks.  The agreement provides a $65 million credit facility and contains both
fixed and floating interest rate options, at the prime rate or lower, and
contains affirmative and negative covenants including requirements that the
Company maintain certain financial ratios and be profitable from continuing
operations each year.  The agreement may be extended one additional year on each
anniversary date upon mutual consent of the Company and the banks.  At any time
during the three years, the Company may elect to convert the loan to a four year
term with equal quarterly principal payments due throughout the term to amortize
the loan in full.

In August 1995, the Company obtained a $10,000,000 short-term loan with the bank
group which was replaced with an increase in its revolving credit facility.  In
the third quarter of 1996, the Company violated certain covenants of its
revolving credit facility including the earnings and leverage covenants.  The
Company received a waiver for these covenant violations and, in addition,
reached an agreement with the banks to amend certain future covenants and to cap
the credit facility at $65 million, formerly $70 million.

The 8% debentures are convertible by the holders at any time prior to maturity
into shares of common stock of the Company at a conversion price of $19.00 per
share.  They are redeemable at the option of the Company at par plus accrued
interest and are subordinate to all senior indebtedness of the Company and all
obligations under various leases.  Unamortized costs incurred in issuing the 8%
convertible subordinated debentures were $464,000 and $552,000 at June 30, 1996
and 1995, respectively, and are included in other assets.  These costs are being
amortized over the term of the agreement.  During 1996 the Company satisfied its
sinking fund requirements for both 1996 and 1997 through the purchase of its
bonds on the open market.  The gain of $257,000 is included in other income in
1996.  The fair value of the 8% convertible debentures outstanding at June 30,
1996 is estimated to be $15,840,000.

The aggregate amount of maturities of long-term debt for the four years
subsequent to 1997 assuming renewal of the revolving credit note is as follows: 
$1,000,000 in 1998, $1,000,000 in 1999, $1,000,000 in 2000 and $1,000,000 in
2001.


NOTE 6.  STOCK OPTIONS AND STOCK TRANSACTIONS

The Company has stock option plans for directors and employees, providing for
grants of options as may be determined by the Audit/Compensation Committee of
the Board of Directors.  Options under the Long-Term Stock Ownership Incentive
Plan and the Director Stock Option Plan are to be granted at no less than 100%
of the current market price at the date of the grant.  No charges are made to
earnings in connection with the options.


Information for the year ended June 30, 1996 with respect to options under the
Company's plan is as follows:


                                     Number            Option Price
                                    of Shares           per Share
                                    ---------    ------------------
Shares under option:
  July 1, 1995......................  947,142    $   4.25 to $21.00
  Granted...........................  201,000        6.88 to  12.38
  Exercised.........................  (55,333)       4.25 to   6.88
  Canceled or expired............... (194,860)       4.25 to  12.88
                                    ---------
  June 30, 1996.....................  897,949    $   4.25 to $21.00
                                    =========

                                         -29-

<PAGE>

Options outstanding at June 30, 1996 are exercisable for common shares as
follows:  758,948 in 1997, 72,000 in 1998 and 67,001 in 1999.  As of June 30,
1996, the Company has 2,104,494 common shares reserved for various conversion
privileges and options.


NOTE 7.  SHAREHOLDER RIGHTS PLAN

The Company has a Shareholder Rights Plan (the Plan) which was established to
deter coercive takeover tactics and to prevent an acquirer from gaining control
of the Company without offering a fair price to all of the Company's
stockholders.  The Plan calls for stockholders of record on July 25, 1988 to
receive a dividend distribution of one right for each outstanding share of the
Company's common stock.  Each share issued after that date is also granted a
right.  Each right entitles the holder, upon the occurrence of certain events,
to purchase a unit consisting of one one-thousandth of a share of Series A
Junior Participating Preferred Stock, no par value, for $25 per unit.  In
addition, if an acquiring person becomes the beneficial owner of more than 20
percent of the Company's outstanding common stock, each right will entitle the
holder (other than such acquiring person) to receive, upon exercise, common
stock of the Company having a value equal to two times the exercise price of the
right or $50.

If after an acquiring person becomes the beneficial holder of more than 20 
percent of the Company's outstanding common stock, the Company is acquired in 
a merger or other business combination in which the Company would not be the 
surviving corporation, or 50% or more of the Company's assets or earning 
power is sold, each holder shall have the right to receive, upon exercise, 
common stock of the acquiring corporation having a value equal to two times 
the exercise price of the right or $50.  The Company may redeem the rights in 
whole, for $.01 per right, under certain circumstances.

NOTE 8.  STOCK RETIREMENT PLAN

The Company's Long-Term Stock Ownership Incentive Plan contains a provision for
a retirement stock award program for certain key executives of the Company.  The
award consists of shares of the Company's common stock and cash ending with the
fiscal year in which the executive attains his or her 62nd birthday.  In order
to receive each year's stock award, the executive must remain employed with the
Company through the end of the fiscal year, unless excused by reason of death or
other involuntary termination.  Participants are also required to retain the
shares awarded for as long as they are employed by the Company or until age 65. 
The size of each participant's annual award is determined under accepted
actuarial principles to provide a retirement income based upon a percentage of
the executive's projected compensation and length of service at retirement, but
only if the Company's stock price appreciates at a sustained target rate.  The
Plan resulted in a charge to earnings of $463,000 (1996), $766,000 (1995) and
$1,239,000 (1994).

                                   -30-

<PAGE>

NOTE 9.  INCOME TAXES

The income tax provision (benefit) from continuing operations is comprised of 
the following for the three years ended June 30:

Dollar amounts in thousands            1996           1995           1994
                                   --------       --------       --------
Current:
Federal............................$  3,050       $  5,154       $  5,072
State..............................     850            708          1,681
                                   --------       --------       --------
                                      3,900          5,862          6,753
                                   --------       --------       --------
Deferred:
Federal............................  (2,302)          (763)           714
State..............................    (668)          (222)           207
                                   --------       --------       --------
                                   $ (2,970)      $   (985)      $    921
                                   --------       --------       --------
Provision for income taxes.........$    930       $  4,877       $  7,674
                                   ========       ========       ========

The components of the net deferred tax asset (liability) are as follows at June
30:

Dollar amounts in thousands                           1996           1995
                                                  --------       --------
Deferred tax assets:
Accounts receivable allowance.....................$    296       $    293
Inventory valuation...............................     769            754
Compensated absences and medical claims...........     591            596
Tax over book basis in affiliates.................   1,509          1,496
Capital loss carryforwards........................     967          1,589
Other liabilities and reserves....................   2,272          1,422
Net operating loss carryforwards..................   2,951          3,238
Provision for discontinued operations.............   2,742          1,887
Valuation allowance...............................  (4,356)        (5,321)
Other.............................................      38             30
                                                  --------       --------
  Total assets....................................$  7,779       $  5,984
                                                  ========       ========
Deferred tax liabilities:
Book over tax basis of capital assets.............$  4,323       $  6,353
                                                  --------       --------
  Total liabilities...............................$  4,323       $  6,353
                                                  --------       --------
  Net deferred tax asset (liability)..............$  3,456       $   (369)
                                                  ========       ========

The valuation allowance relates principally to potential benefits from deferred
tax assets that the Company estimates may not be realizable, including portions
of tax over book basis in affiliates, capital loss carryforwards, net operating
loss carryforwards, and tax credit carryforwards.  The decrease in the valuation
allowance is due to the expiration of unutilized net operating loss
carryforwards and to the utilization of capital loss carryforwards which
previously were not expected to be realized.  At June 30, 1996, certain
subsidiaries of the Company have approximately $7,400,000 of net operating loss
carryforwards for tax purposes which arose in periods prior to acquisition by
the Company.  These carryforwards expire in years from 1997 through 2005.  In
addition, the Company has approximately $2,400,000 in capital loss
carryforwards, substantially all of which will expire in 1997 and 1998.

                                 - 31 -

<PAGE>

The net deferred tax asset (liability) is presented on the balance sheet as
follows at June 30:

Dollar amounts in thousands                           1996           1995
                                                  --------       --------
Current deferred tax asset........................$  2,643       $  1,582
Noncurrent deferred tax liability.................  (1,929)        (3,838)
                                                  --------       --------
Net deferred tax asset (liability)
  of continuing operations........................     714         (2,256)
Current deferred tax asset of 
  discontinued operations.........................   2,742          1,887
                                                  --------       --------
Total net deferred tax asset (liability)..........$  3,456       $   (369)
                                                  ========       ========

The current deferred tax asset of discontinued operations is netted against the
net liabilities of discontinued operations in the liability section of the
balance sheet.

The Income tax (benefit) provision differed from the taxes calculated at the
statutory federal tax rate as follows for the three years ended June 30:

Dollar amounts in thousands                          1996       1995      1994
                                                 --------   --------  --------
Taxes at statutory rate..........................$  1,191    $ 6,099   $ 8,441
State income taxes...............................     120        321     1,246
Gain on equity investment........................                         (207)
Utilization of capital loss carryforwards........    (561)
Other, including adjustment of estimates.........     180     (1,543)   (1,806)
                                                 --------   --------  --------
Income tax (benefit) provision...................$    930    $ 4,877   $ 7,674
                                                 ========   ========  =========

NOTE 10.  EARNINGS PER SHARE

Primary earnings per share is computed by dividing the net earnings for each
period by the weighted average number of common and common equivalent shares
outstanding.

Fully diluted earnings per share is computed based on the assumption that all of
the convertible debentures are converted into common shares.  Under this
assumption, the weighted average number of shares is increased accordingly and
net earnings is increased by the amount of interest expense and amortization of
deferred debenture costs relating to the convertible debentures, less income tax
benefits.  Since the effect is anti-dilutive in 1996 and 1995, the amount
reported is the same as primary earnings per share.

NOTE 11.  COMMITMENTS AND CONTINGENT LIABILITIES

Aggregate rental expense under operating leases, principally for office and
manufacturing facilities used in continuing operations was $844,000 in 1996,
$764,000 in 1995 and $634,000 in 1994.  These operating leases include options
for renewal or purchase of the leased property.  Annual minimum future rentals
for lease commitments related to continuing operations range from approximately
$700,000 in 1997 to $300,000 in 2001, an aggregate of $2,000,000 through 2001.

The Company has employment agreements with certain executives, which are
designed to retain the services of key employees and to provide for continuity
of management in the event of an actual or threatened change in control of the
Company.  Upon occurrence of a triggering event after a change in control, as
defined, the Company would be liable for payment of benefits under these
agreements.

                                 - 32 -

<PAGE>

In 1990, Disc Manufacturing, Inc. (DMI) and the Company filed lawsuits in the
federal and state courts in Alabama against the Disctronics Group, the former
owners of DMI, relating to DMI's misappropriated corporate opportunity to
acquire Memory-Tech, a competing compact disc manufacturer located in Plano,
Texas, and certain trademark infringement claims.  In response to the two
Alabama suits, the Disctronics Group filed counterclaims alleging breach of
contract, economic duress, fraud, unfair competition and seizure of corporate
opportunity, among others.  The Disctronics Group also filed an action in
Dallas, Texas which was subsequently dismissed.  In 1990, the Alabama state
court issued a preliminary injunction in favor of the Company and DMI,
precluding the Disctronics Group from transferring any interest in Memory-Tech
and other restrictions.  

In connection with this injunction, the Company and DMI were required to post a
$6,000,000 certificate of deposit as injunction security.  In March 1996, the
Circuit Court approved DMI's substitution of a $6,000,000 surety bond backed by
a $2,000,000 letter of credit to replace the certificate of deposit.

In May 1992, the Alabama Supreme Court reversed the judge's 1990 order granting
preliminary injunction.  In September 1992, Quixote filed additional counts
seeking to enforce a settlement agreement reached in June 1991.  The court ruled
against the Company and DMI on those counts, in response to the Disctronics
Group's motion for summary judgment.  The Company and DMI sought reconsideration
of that ruling, which the court denied in May 1995.  The Company also amended
its complaint to add claims for unjust enrichment, fraud and tortious
interference, which the defendants moved to dismiss.

In a May 1995 order, the court dismissed many of the defendants' and the 
Company's claims.  Subsequent to the May 1995 order, defendants filed a 
notice of appeal and the Company has cross-appealed.  The decision of the 
Alabama Supreme Court is pending.  Court-appointed mediation has not been 
successful.

Several companies holding patents related to optical disc technology have 
contacted the Company to request that DMI enter into licensing arrangements 
with them, and two companies have filed suits against DMI for patent 
infringement in Delaware federal court.  In one of the cases, a federal 
jury ruled that the plaintiff's patents were invalid.  In the other case, 
DMI filed a lawsuit against the plaintiff for antitrust violations and 
DMI's lawsuit has been consolidated with the plaintiff's patent case for 
all purposes.  Discovery is proceeding.  Royalties requested by the patent 
holder could result in a significant cost to DMI and in reduced future 
margins if licensing arrangements were required under the terms proposed by 
the patent holder.

In September 1990, DMI was sued by a start-up business that claimed DMI 
failed to produce certain videodiscs on schedule, thereby injuring its 
business.  After a trial, on August 25, 1992, the jury awarded the 
plaintiff $975,000 in damages. In October 1992, the court granted DMI's 
motion for a new trial which was subsequently affirmed by the appellate 
court.  No trial date has been set.

Stenograph Corporation, a discontinued operation, and a number of 
manufacturers of keyboards and related equipment have been sued by 
individuals for repetitive stress injuries.  The 29 cases against 
Stenograph, and in some cases the Company, request damages ranging from 
$500,000 to $1,000,000, and in most cases, punitive damages, with some 
plaintiffs claiming an amount of $10,000,000.  All cases have been referred 
to the Company's insurance carriers and the Company believes that any 
liability (excluding punitive damages) will be covered under its insurance 
policies.  The Company does not believe there are grounds for the 
imposition of punitive damages and intends to vigorously defend all claims.

The Company is involved in these and other legal actions common to its 
businesses. The Company has recorded loss contingencies where appropriate 
within the guidelines established by Statement of Financial Accounting 
Standards No. 5 "Accounting for Contingencies". The Company believes it has 
defenses for all such claims and is vigorously defending the actions.  In the 
opinion of management, based on the advice of legal counsel,

                                 - 33 -

<PAGE>

liabilities, if any, arising from these legal actions should not have a material
effect on the Company's results of operations or financial condition.

NOTE 12.  SUPPLEMENTAL CASH FLOW STATEMENT DISCLOSURES

Cash paid for interest was $6,105,000 (1996), $4,015,000 (1995) and $3,360,000
(1994).  Cash paid for income taxes was $1,495,000 (1996), $4,116,000 (1995) and
$7,878,000 (1994).

Purchases of property, plant and equipment of $9,225,000 which are included in
accounts payable at June 30, 1995 were paid during 1996.


NOTE 13.  INDUSTRY SEGMENT INFORMATION

The Company's operations are comprised of two industry segments:  the
manufacture and sale of energy absorbing highway safety devices and the
manufacture and sale of compact discs.

Interest income on corporate investments, interest expense, and certain
unallocated corporate expenses have not been added or deducted from earnings
from continuing operations before income taxes.  Identifiable assets by segment
are those assets that are used in the Company's operations by each industry
segment.  Corporate assets are principally cash and cash equivalents, and
equipment.

Substantially all the sales of highway safety devices are to contractors
providing product and services to federal, state and local governmental units. 
Sales of the compact disc segment to the recording industry comprised 35%
(1996), 58% (1995) and 64% (1994) of the segments sales.  The Company derived
approximately 8% (1996), 18% (1995) and 21% (1994) of consolidated net sales
from a single customer in the compact disc segment.

                                 - 34 -

<PAGE>


Dollar amounts in thousands                   1996          1995          1994
                                          --------      --------      --------
Net Sales:
  Highway safety devices..................$ 46,750      $ 46,522      $ 43,433
  Compact discs...........................  82,409        87,296        83,185
                                          --------      --------      --------
    Total.................................$129,159      $133,818      $126,618
                                          ========      ========      ========

Earnings (Loss) from Continuing Operations
Before Income Taxes:
  Highway safety devices..................$ 11,640      $ 11,797      $ 11,906
  Compact discs...........................  (2,529)        8,655        15,508
                                          --------      --------      --------
    Subtotal..............................   9,111        20,452        27,414
  Unallocated corporate...................                (1,401)       (1,355)
  Interest income
   (expense), net.........................  (5,607)       (3,467)       (2,762)
                                          --------      --------      --------
    Total.................................$  3,504      $ 15,584      $ 23,297
                                          ========      ========      ========

Identifiable Assets at Year-End:
  Highway safety devices..................$ 28,079      $ 35,809      $ 26,971
  Compact discs...........................  93,673        97,888        62,719
  Corporate...............................   8,077        11,237         8,594
                                          --------      --------      --------
    Total.................................$129,829      $144,934      $ 98,284
                                          ========      ========      ========

Depreciation and Amortization Expenses:
  Highway safety devices..................$  1,733      $  1,676      $  1,421
  Compact discs...........................  12,657         9,732         8,300
  Corporate...............................      61           124           126
                                          --------      --------      --------
    Total.................................$ 14,451      $ 11,532      $  9,847
                                          ========      ========      ========

Capital Expenditures:
  Highway safety devices..................$  3,703      $  3,107      $  1,433
  Compact discs...........................  11,483        41,115         8,033
  Corporate...............................       8            33             6
                                          --------      --------      --------
    Total.................................$ 15,194      $ 44,255      $  9,472
                                          ========      ========      ========

                                         - 35 -

<PAGE>

NOTE 14.  QUARTERLY AND FINANCIAL DATA (UNAUDITED):

Summarized quarterly financial data for years 1996 and 1995 follows:

<TABLE>
<CAPTION>

                                                   Three Months Ended
Dollar amounts in thousands,
  except per share data.               9/30       12/31        3/31       6/30
                                     --------    --------    --------    --------
<S>                                  <C>         <C>         <C>         <C>
1996
Net sales............................$ 37,643    $ 36,067    $ 26,426    $29,023
Gross profit.........................  11,759       9,669       6,586     10,959
Earnings (loss) from continuing 
  operations.........................   1,769         452      (1,801)     2,154
Loss from discontinued operations.... (12,331)       (135) 
                                     --------    --------    --------    --------
Net earnings (loss)..................$(10,562)   $    317    $ (1,801)   $ 2,154
                                     ========    ========    ========    ========

Primary earnings (loss) per share:
  Continuing operations..............$    .22    $    .06    $   (.23)   $   .27
                                     --------    --------    --------    --------
  Net earnings (loss)................$  (1.32)   $    .04    $   (.23)   $   .27
                                     ========    ========    ========    ========
Fully diluted earnings (loss)
 per share:
  Continuing operations..............$    .22    $    .06    $   (.23)   $   .26
                                     --------    --------    --------    --------
  Net earnings (loss)................$  (1.32)   $    .04    $   (.23)   $   .26
                                     ========    ========    ========    ========

<CAPTION>
                                                   Three Months Ended
Dollar amounts in thousands,
  except per share data                9/30       12/31        3/31       6/30
                                     --------    --------    --------    --------
<S>                                  <C>         <C>         <C>         <C>

1995
Net sales............................$ 33,768    $ 34,315    $ 32,393    $33,342
Gross profit.........................  12,508      11,721      11,190     10,728
Earnings from continuing 
  operations.........................   3,052       2,481       2,320      2,854
Loss from discontinued operations....    (964)     (1,604)       (611)    (1,578)
                                     --------    --------    --------    --------
Net earnings.........................$  2,088    $    877    $  1,709    $ 1,276
                                     ========    ========    ========    ========
Primary earnings per share:
  Continuing operations..............$    .37    $    .31    $    .28    $   .36
                                     --------    --------    --------    --------
  Net earnings.......................$    .25    $    .11    $    .21    $   .16
                                     ========    ========    ========    ========
Fully diluted earnings
 per share:
  Continuing operations..............$    .36    $    .30    $    .28   $    .34
                                     --------    --------    --------    --------
  Net earnings.......................$    .25    $    .11    $    .21   $    .16
                                     ========    ========    ========    ========
</TABLE>

ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURES
------------------------------------------------------------------------
None.

                                        -36-

<PAGE>

                                     PART III

ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
------------------------------------------------------------

Some of the information required in response to this item regarding Directors 
of the Registrant is set forth under "Election of Directors" on pages 2 and 3 
of the Registrant's Definitive Proxy Statement for the Annual Meeting of 
Stockholders to be held on November 14, 1996 to be filed with the Commission 
on or about October 2, 1996 and is incorporated herein by reference.

The executive officers of the Company, their ages and offices held by each 
during fiscal 1996 are as follows:

Philip E. Rollhaus, Jr.    61     Chairman, Chief Executive Officer & Director -
                                  Quixote Corporation
                                  Chairman, Energy Absorption Systems, Inc. and
                                  Disc Manufacturing, Inc.
Leslie J. Jezuit           50     President and Chief Operating Officer - 
                                  Quixote Corporation
James H. DeVries           64     Executive Vice President, General Counsel,
                                  Secretary & Director
Myron R. Shain             56     Executive Vice President - Finance & Treasurer
                                  President, Disc Manufacturing, Inc.
George D. Ebersole         60     President, Energy Absorption Systems, Inc.

Mr. Rollhaus has been the Chairman and Chief Executive Officer and a Director 
of the Company since its formation in July 1969.

Mr. Jezuit joined the Company as President and Chief Operating Officer of 
Quixote Corporation in 1996.  Prior to that time, Mr. Jezuit served as 
President and Chief Operating Officer of RobertShaw Controls Company.

Mr. DeVries joined the Company as Vice President in 1982.  Mr. DeVries has 
been a Director of the Company since its formation.

Mr. Shain joined the Company as Controller in April 1972, was elected 
Treasurer in 1975, Vice President in 1981 and Executive Vice President - 
Finance in 1986. Mr. Shain was elected President of Disc Manufacturing, Inc. 
in May 1990.

Mr. Ebersole joined the Company as President of Energy Absorption Systems, 
Inc. in 1980.

There is no family relationship between any of the officers described above.

Except as set forth in Item 3, none of the officers described above are party 
or otherwise involved in any legal proceedings adverse to the Company or its 
subsidiaries.

ITEM 11.  EXECUTIVE COMPENSATION
--------------------------------

The information required in response to this item is set forth under the 
caption "Renumeration of Directors and Executive Officers" of the 
Registrant's Definitive Proxy Statement for the Annual Meeting of 
Stockholders to be held on November 14, 1996 to be filed with the Commission 
on or about October 2, 1996 and is incorporated herein by reference.

                                   -37-

<PAGE>

ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
------------------------------------------------------------------------

The information required in response to this item is set forth under the 
caption "Stock Ownership by Certain Beneficial Owners" of the Registrant's 
Definitive Proxy Statement for the Annual Meeting of Stockholders to be held 
on November 14, 1996 to be filed with the Commission on or about October 2, 
1996 and is incorporated herein by reference.

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS 
--------------------------------------------------------

The information required in response to this item is set forth under the 
caption "Certain Transactions and Business Relationships" of the Registrant's 
Definitive Proxy Statement for the Annual Meeting of Stockholders to be held 
on November 14, 1996 to be filed with the Commission on or about October 2, 
1996 and is incorporated herein by reference.



                                         -38-

<PAGE>
                                    PART IV

Item 14.  Exhibits, Financial Statement Schedules and Reports on Form 8-K
          ----------------------------------------------------------------

Item                                                         Page Number in
Number                                                         This Report
------                                                       --------------

(a).1.      Financial Statements
            --------------------

            Report of Independent Accountants                      21

            Consolidated Statements of Operations for the
             years ended June 30, 1996, 1995 and 1994              22

            Consolidated  Balance Sheets as of June 30,
             1996 and 1995                                         23

            Consolidated Statements of Shareholders'
             Equity for the years ended June 30, 1996,
             1995 and 1994                                         24

            Consolidated Statements of Cash Flows for the
             years ended June 30, 1996, 1995 and 1994              25

            Notes to Consolidated Financial Statements          26-36


(a).2.      Financial Statement Schedule
            -----------------------------

            The financial statement schedule listed under Item 14(d) is filed 
            as part of this annual report.  All other schedules have been 
            omitted because the required information is included in the 
            consolidated financial statements or notes thereto or because they 
            are not applicable or not required.
    
(a).3.      The exhibits listed under Item 14(c) are filed as part of
            this annual report.
    
(b).        Reports on Form 8-K
            -------------------

            On May 1, 1996, the Company filed a Form 8-K/A Amendment submitting 
            pro forma financial information required in connection with a 
            report on Form 8-K filed March 4, 1996, reporting the sale of 
            certain assets of Stenograph Corporation and its divisions, 
            Integrated Information Services and  Litigation Sciences.
            
(c).        Exhibits
            --------

            *Management contract or compensatory plan or agreement

    3.(a)   Restated Certificate of Incorporation dated June 27, 
            1980; Certificate of Amendment to Certificate of Incorporation 
            dated November 17, 1981; Certificate of Amendment to Certificate of 
            Incorporation dated February 15, 1985; Certificate of Amendment to 
            Certificate of Incorporation dated February 25, 1986; and 
            Certificate of Designations, Preferences and Rights 

                                  - 39 -

<PAGE>
            of Series A Junior Participating Preferred Stock dated July 27, 
            1988, filed as Exhibit 3(a) to the Company's Form 10-K Report for 
            the fiscal year ended June 30, 1991, File No. 0-7903, and 
            incorporated herein by reference.
                
      (b)   Restated By-Laws of the Company as amended through 
            January 23, 1996,filed as Exhibit 3(b) to the Company's Form 10-Q 
            Report for the quarter ended March 31, 1996, File No. 0-7903, and 
            incorporated herein by reference.
                
    4.(a)   Indenture under the Trust Indenture Act of 1939 between 
            the Company and LaSalle National Bank dated April 15, 1986, filed 
            as Exhibit 4(b) to the Company's Form 10-Q Report for the quarter 
            ended March 31, 1986, File No. 0-7903, and incorporated herein by 
            reference.
    
      (b)   Rights Agreement dated as of July 15, 1988, between the 
            Company and First National Bank of Boston, as Rights Agent, filed 
            as Exhibit 1 to the Company's Form 8-A Registration Statement dated 
            July 25, 1988, File No. 0-7903, and incorporated herein by 
            reference.
    
   10.(a)   Loan Agreement ("Loan Agreement") dated as of June 26, 
            1992 among the Company, Energy Absorption Systems, Inc. ("Energy"), 
            Disc Manufacturing, Inc. ("DMI"), Stenograph Corporation 
            ("Stenograph"), The Northern Trust Company ("Northern"), NBD Bank, 
            N.A. ("NBD") and LaSalle National Bank ("LaSalle") and First 
            Amendment thereto dated as of June 30, 1992, filed as Exhibit 10(a) 
            to the Company's Form 10-K Report for the  fiscal year ended June 
            30, 1992, file No. 0-7903, and incorporated herein by reference; 
            Second Amendment to Loan Agreement dated as of May 28, 1993 and 
            Third Amendment to Loan Agreement dated as of June 26, 1993, filed 
            as Exhibit 10(a) to the Company's Form 10-K Report for the fiscal 
            year ended June 30, 1993, File No. 0-7903, and incorporated herein 
            by reference; Fourth Amendment to Loan Agreement dated as of May 
            31, 1994, filed as Exhibit 10(a), to the Company's Form 10-K Report 
            for the fiscal year ended June 30, 1994, File No. 0-7903, and 
            incorporated herein by reference;  Fifth Amendment to Loan 
            Agreement dated as of December 1, 1994, filed as Exhibit 10(a) to 
            the Company's Form 10-Q for the quarter ended December 31, 1994, 
            File No. 0-7903, and incorporated herein by reference; Sixth 
            Amendment to Loan Agreement dated as of April 3, 1995, filed as 
            Exhibit 10(a) to the Company's Form 10-Q Report for the quarter 
            ended March 31, 1995, File No. 0-7903, and incorporated herein by 
            reference;  Seventh Amendment to Loan Agreement dated as of 
            November 10, 1995, filed as Exhibit 10(a) to the Company's Form 
            10-Q Report for the quarter ended December 31, 1995, File No. 
            0-7903, and incorporated herein by reference;  Eighth Amendment to 
            Loan Agreement effective as of March 31, 1996, filed herewith; 
            Revolving Credit Notes dated as of March 31, 1996 from the Company 
            and its subsidiaries to the Northern, NBD and LaSalle, filed 
            herewith; Guaranty Agreement by and between DMI and the First 
            Alabama Bank dated as of March 31, 1993, filed as Exhibit 10(a) to 
            the Company's Form 10-K Report for the fiscal year ended June 30, 
            1993, File No. 0-7903, and incorporated herein by reference.
    
      (b)*  1981 Employee Incentive Stock Option Plan, as amended 
            through June 3, 1988, filed as Exhibit 4.4 to the Company's Form 
            S-8 Registration Statement No. 33-22289, and incorporated herein by 
            reference; Amendment dated February 12, 1989 to the Employee 
            Incentive Stock Option Plan, filed as Exhibit 10(c) to the 
            Company's Form 10-K Report for the fiscal year ended June 30, 1989, 
            File No. 0-7903, and incorporated herein by reference.
    
      (c)*  1991 Incentive Stock Option Plan, filed as Exhibit 4(a) 
            to the Company's S-8 Registration Statement No. 33-50428, and 
            incorporated herein by reference.
    
      (d)*  Restated 1972 Director Stock Option Plan, as amended through 

                                 - 40 -
<PAGE>

            June 3, 1988, filed as Exhibit 4.3 to the Company's S-8 
            Registration Statement No. 33-22289, and incorporated herein by 
            reference; Amendment dated February 12, 1989 to the Restated 
            Director Stock Option Plan, filed as Exhibit 10(d) to the Company's 
            Form 10-K Report for the fiscal year ended June 30, 1989, File No. 
            0-7903, and incorporated herein by reference.
                
      (e)*  1991 Director Stock Option Plan, filed as Exhibit 4(b) 
            to the Company's S-8 Registration Statement No. 33-50428, and 
            incorporated herein by reference.
    
      (f)*  1993 Long-Term Stock Ownership Incentive Plan, filed as 
            Exhibit 4(a) to the Company's S-8 Registration Statement No. 
            33-74488, and incorporated herein by reference; Retirement Award 
            Agreements for Philip E. Rollhaus, Jr., James H. DeVries, Myron R. 
            Shain and George D. Ebersole, dated June 30, 1993 and as amended on 
            August 23, 1996, filed herewith.
                
      (g)   Lease Agreement between the Company and United 
            Insurance Company of America ("Company Lease") dated July 2, 1993, 
            filed as Exhibit 10(j) to the Company's Form 10-K Report for the 
            fiscal year ended June 30, 1993, File No. 0-7903, and incorporated 
            herein by reference; Lease Amendment to Company Lease dated as of 
            May 17, 1994, filed as Exhibit 10(h) to the Company's Form 10-K 
            Report for the fiscal year ended June 30, 1994, File No. 0-7903, 
            and incorporated herein by reference; Second Amendment to Company 
            Lease dated January 30, 1995 and Third Amendment to Company Lease 
            dated December 15, 1995, filed as Exhibits 10(b) and 10(c) to the 
            Company's Form 10-Q Report for the quarter ended December 31, 1995, 
            File No. 0-7903, and incorporated herein by reference; Amended and 
            Restated Lease Agreement dated as of September 1, 1987 by and 
            between the Industrial Development Board of the City of Huntsville, 
            Alabama, (the "Board") and LaserVideo, Inc. (now known as Disc 
            Manufacturing Inc. ("DMI")), filed as Exhibit 10(g) to the 
            Company's Form 10-K Report for the fiscal year ended June 30, 1990, 
            File No. 0-7903, and incorporated herein by reference; Series 1991 
            Amendment to Lease Agreement dated as of April 1, 1991 by and 
            between DMI and the Board, filed as Exhibit 10(i) to the Company's 
            Form 10-K Report for the fiscal year ended June 30, 1991, File No. 
            0-7903, and incorporated herein by reference; Series 1993 Amendment 
            to Lease Agreement dated as of March 1, 1993 by and between DMI and 
            the Board and Financing Statement, filed as Exhibit 10(j) to the 
            Company's Form 10-K Report for the fiscal year ended June 30, 1993, 
            File No. 0-7903, and incorporated herein by reference; Office Lease 
            between Amberjack, Ltd. and Litigation Sciences, Inc. dated July 2, 
            1990, and Lease Agreement between Coventry Fund III, Ltd. and 
            Litigation Sciences, Inc. dated July 30, 1990, filed as Exhibit 
            10(a) to the Company's Form 10-Q Report for the quarter ended 
            December 31, 1993, File No. 0-7903 and incorporated herein by 
            reference; First Amendment to Office Lease between Amberjack Ltd. 
            and Stenograph Corporation dated as of June 23, 1994, filed as 
            Exhibit 10(h) to the Company's Form 10-K Report for the fiscal year 
            ended June 30, 1994, File No. 0-7903, and incorporated herein by 
            reference.
                
      (h)*  Employment agreements dated as of June 24, 1991 between 
            the Company and each of Messrs. Philip E. Rollhaus, Jr., James H. 
            DeVries and Myron R. Shain, filed as Exhibit 10(k) to the Company's 
            Form 10-K Report for the fiscal year ended June 30, 1991, File No. 
            0-7903, and incorporated herein by reference; Key Employee 
            Severance Agreement between the Company and George D. Ebersole; 
            Trust Agreement dated March 3, 1989 between the Company and The 
            Northern Trust Company, as trustee, filed as Exhibits 28.4 and 
            28.5, respectively, to the Company's Form 8-K Report dated April 
            14, 1989, and incorporated herein by reference; Amendment to Trust 
            Agreement dated November 9, 1989, filed as Exhibit 10(j) to the 
            Company's Form 10-K Report for the fiscal year ended June 30, 1990, 
            File No. 0-7903, and incorporated herein by reference; Amendment to 
            Trust Agreement dated as of June 13, 1991, filed as Exhibit 10(k) 
            to the 

                                        - 41 -
<PAGE>
            Company's Form 10-K Report for the fiscal year ended June 
            30, 1991, File No. 0-7903, and incorporated herein by reference; 
            Letter Agreement dated December 15, 1995 between the Company and 
            Leslie J. Jezuit, filed as Exhibit 10(d) to the Company's Form 10-Q 
            Report for the quarter ended December 31, 1995, File No. 0-7903, 
            incorporated herein by reference; Key Employee Severance Agreement 
            dated as of April 30, 1996 between the Company and Leslie J. 
            Jezuit, filed as Exhibit 10(a) to the Company's Form 10-Q Report 
            for the quarter ended March 31, 1996, File No. 0-7903, and 
            incorporated herein by reference.
                
      (i)   Summary Plan Description for the Incentive Savings Plan 
            of the Company Amended and Restated to Reflect Provisions Effective 
            July 1, 1993, filed as Exhibit 10(j) to the Company's Form 10-K 
            Report for the fiscal year ended June 30, 1994, File No. 0-7903, 
            and incorporated herein by reference.
                
      (j)   Agreements between the Company, Philip E. Rollhaus, Jr. 
            and Yukio Endo dated May 5, 1986, filed as Exhibit 10(a) to the 
            Company's Form 10-Q Report for the quarter ended March 31, 1986, 
            File No. 0-7903, and incorporated herein by reference.
                 
      (k)   Disposition and Development Agreement dated August 30, 
            1994 by and among The Anaheim Redevelopment Agency, the City of 
            Anaheim and Disc Manufacturing, Inc., filed as Exhibit 10(p) to the 
            Company's Form 10-K Report for the fiscal year ended June 30, 1994, 
            File No. 0-7903, and incorporated herein by reference.
    
      (l)   Agreement for Purchase and Sale dated February 13, 1996 
            between Stenograph Acquisition Corp., IIS Acquisition Corp., 
            Pettibone Corp., and Quixote Corporation, Stenograph Corporation, 
            Legal Technologies, Inc., Legal Technologies Limited and Integrated 
            Information Services filed as Exhibit 2.1 to the Company's 8-K 
            Report dated March 4, 1996, File No. 0-7903, and incorporated 
            herein by reference.

      (m)   Agreement for Purchase and Sale dated January 25, 1996 
            between Stenograph Corporation and LSI Acquisition, Inc. filed as 
            Exhibit 2.2 to the Company's 8-K Report dated March 4, 1996, File 
            No. 0-7903, and incorporated herein by reference.
            
      (n)   Agreement for Purchase and Sale of Assets dated July 3, 
            1996 between Integrated Information Services, Inc., Pettibone 
            Corporation, Quixote Corporation and Discovery Products, Inc., 
            filed herewith.
            
   11.      Statement regarding computation of earnings per share         

   21.      Subsidiaries of the Company                                      

   23.      Consent of Coopers & Lybrand, L.L.P. as Independent
            Certified Public Accountants                                     

   27.      Financial Data Schedule                                          

                                                                      
(d)  Schedules:                                                        
     ---------                                                        

     II   -  Valuation and Qualifying Accounts and Reserves                  

                                   - 42 -
<PAGE>

                                    SIGNATURES


Pursuant to the requirement of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunder duly authorized


                                QUIXOTE CORPORATION
                                    (Registrant)


Dated:    February 24, 1997                   By: /s/Philip E. Rollhaus, Jr.
      --------------------------              --------------------------------
                                              Philip E. Rollhaus, Jr., Chairman


Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant and
in the capacities and on the dates indicated.

<TABLE>
<CAPTION>
SIGNATURE                         TITLE                             DATE
---------                         -----                             ----
<S>                           <C>                                <C>
/s/Philip E. Rollhaus, Jr.
---------------------------   Chairman and Director              February 24, 1997
Philip E. Rollhaus, Jr.       (Chief Executive Officer)

/s/Leslie J. Jezuit
---------------------------   President and Chief Operating      February 24, 1997
Leslie J. Jezuit              Officer

/s/Daniel P. Gorey
---------------------------   Vice President, Chief Financial    February 24, 1997
Daniel P. Gorey               Officer and Treasurer (Chief 
                              Accounting and Financial Officer)

/s/James H. DeVries
---------------------------   Executive Vice President and       February 24, 1997
James H. DeVries              Secretary, Director

/s/William G. Fowler
---------------------------   Director                           February 24, 1997
William G. Fowler

/s/Lawrence C. McQuade
---------------------------   Director                           February 24, 1997
Lawrence C. McQuade


---------------------------   Director
David S. Ruder

/s/Robert D. van Roijen, Jr.
---------------------------   Director                           February 24, 1997
Robert D. van Roijen, Jr.   

</TABLE>

                                  - 43 -
<PAGE>

                            QUIXOTE CORPORATION & SUBSIDIARIES
               SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
                    For the years ended June 30, 1996, 1995 and 1994



<TABLE>
<CAPTION>
Column A               Column B        Column C          Column D(a)      Column E
--------               --------        -----------       -----------      ---------
<S>                    <C>             <C>               <C>              <C> 

                                       Additions
                       Balance at      Charged to                        Balance at
                     Beginning of      Costs and                           End of
Description             Period          Expenses          Deductions       Period
-----------          ------------      ----------        -----------      ---------

Deducted from
 Receivables:

Allowance for
 Doubtful Accounts:

Year ended 
 June 30, 1996       $  810,000        $  530,000        $  600,000      $  740,000
                     ==========        ==========        ==========      ==========
Year ended
 June 30, 1995       $  665,000        $  463,000        $  318,000      $  810,000
                     ==========        ==========        ==========      ==========
Year ended
 June 30, 1994       $  520,000        $  631,000        $  486,000      $  665,000
                     ==========        ==========        ==========      ==========

</TABLE>

NOTES:

(a)  Column D represents accounts written off as uncollectable, net of 
     collections on accounts previously written off.






                                    - 44 -

<PAGE>

                                     EXHIBIT INDEX

<TABLE>
<CAPTION>
          EXHIBIT NUMBER                          EXHIBITS
      ----------------------         -------------------------------------------
      <S>                            <C>
                10(a)                EIGHTH AMENDMENT TO LOAN AGREEMENT EXECUTED AS OF 
                                     JUNE 4, 1996 AND EFFECTIVE MARCH 31, 1996.

                10(a)                REVOLVING CREDIT NOTES DATED MARCH 31. 1996.

                10(f)                RETIREMENT AWARD AGREEMENTS

                10(f)                AMENDED RETIREMENT AWARD AGREEMENTS DATED 
                                     AUGUST 23, 1996.

                10(n)                AGREEMENT FOR PURCHASE AND SALE OF ASSETS 
                                     DATED JULY 3, 1996.

                11                   STATEMENT REGARDING COMPUTATION OF EARNINGS
                                     PER SHARE.

                21                   SUBSIDIARIES OF THE COMPANY.

                23                   CONSENT OF COOPERS & LYBRAND L.L.P. AS INDEPENDENT
                                     CERTIFIED PUBLIC ACCOUNTANTS.

                27                   FINANCIAL DATA SCHEDULE
</TABLE>
        









                                     - 45 -